The outlook is rosy for SolarEdge Technologies and First Solar , according to Goldman Sachs. Analyst Brian Lee named the two solar stocks among his top picks heading into 2023, saying they can add to this year’s gains. “While solar equities outperformed in 2022 vs. R2K, stocks are still ~20% below early ’21 peak levels and valuations remain below pre-IRA levels,” Lee wrote in a Sunday note. “This is despite fundamentals having significant positive momentum that we see setting up for healthy upside across many pockets of the group into 2023, particularly in the backdrop of improving margins and policy tailwinds (not uncertainties),” Lee added. Solar stocks outperformed in the second half of 2022, after underperforming in the first half of the year, following the passage of the Inflation Reduction Act. The analyst expects they’ll continue to get a boost from the IRA in the years ahead, as supply expands to meet growing demand. “We forecast global solar installs to grow ~40% in 2023 to ~320GW. Across end markets, we prefer exposure to US utility-scale levered names,” he wrote. Shares of SolarEdge Technologies have climbed more than 14% this year. Lee expects they have an “attractive risk-reward” as the company continues to improve margins heading into next year. The analyst’s 12-month price target of $416, compared to the prior $391, represents upside of nearly 30% from Friday’s closing price for the stock. Meanwhile, shares of First Solar may have surged more than 77% this year, but the analyst forecasts the company could be the “biggest beneficiary of the IRA” because of its “outsized leverage to US utility-scale solar,” Lee said. The analyst raised his 12-month price target to $231, up from $179, implying nearly 49% upside from Friday’s close. —CNBC’s Michael Bloom contributed to this report.