Second-quarter earnings for solar companies kick off next week, and Goldman said two stocks in particular should be on investors’ radar: Enphase Energy and SolarEdge . The firm said in a recent note to clients that both companies have the potential to beat quarterly estimates, while also raising guidance. Analysts led by Brian Lee said both companies, which make inverters for solar systems, are benefitting from strong demand in Europe, as well as demand for their energy storage products. Israel-based SolarEdge is on Goldman’s conviction list. “Our channel checks suggested that EU demand continued to be strong, and SEDG appears to be gaining some market share” in the commercial and industrial market, Lee said. The firm holds a $449 target on the stock, which is 53% above where shares closed Thursday. The company will provide its quarterly update after the market closes on Aug. 2. Solar stocks and renewable energy names more broadly have come under pressure this year. Policy uncertainty, supply chain headwinds and rising rates are among the factors that have weighed on shares. The Invesco Solar ETF , which tracks the industry, has shed 5% this year. Over the last three months, however, it’s gained 12%. “Looking ahead to 2Q22 earnings season, we continue to see solar fundamentals trending in the right direction with demand robust, while supply chain issues and policy drivers appear more de-risked than they have in some time,” Goldman wrote. Still, the firm said that investors’ focus will likely shift to “strong execution stories.” Enphase’s bull case is similar to that of SolarEdge’s, according to Goldman. Lee expects the company’s growth in Europe to remain strong, and noted that its pricing power should support margins. “ENPH implemented price increases which were effective in March and which we expect to continue to help the company maintain stable gross margin despite continued cost inflation,” the firm said. Goldman has a $244 12-month target on the stock, which is 11% above where the stock closed on Thursday. Enphase will report second-quarter results on July 26 after the market closes. The firm also favors Array Technologies , which creates solar tracking systems for utility-scale projects. “[W]e believe the company has gained better visibility on project timing and is set up for meaningful margin recovery through the rest of the year,” Lee said. On the other hand, Goldman is cautious on the panel suppliers, rating First Solar , JinkoSolar and Maxeon Solar as sells. “The cost environment remains a challenge overall and we don’t expect recent easing in cost pressures to show up immediately in margin given typical lead times,” the firm said of First Solar. Overall, Goldman anticipates the company reporting a “notable miss” during the second quarter. – CNBC’s Michael Bloom contributed reporting.