Boosting the share of electricity generated from solar power is a key objective in the battle against global climate change. As a result, solar power companies are seeing massive growth in sales, and the global solar market is projected to expand at a rate of approximately 7% annually through 2030.
Among the solar companies analyzed in our research, Daqo has the highest three-year annualized earnings per shares (EPS) and sales growth metrics. It also features a breathtakingly low forward price/earnings ratio(P/E) of 2.3, suggesting that the stock is very cheap.
SolarEdge designs and sells the power transmission equipment that makes it possible to get solar-generated electricity onto the electric power grid. That means things like inverters and monitoring systems used in solar installations.
We began our search for the best solar power stocks by compiling a list of 27 public companies that are major players in the solar industry. This included companies with a business model primarily focused on solar power or ones that dealt with solar-related products or services.
Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.
Cory has been a professional trader since 2005, and holds a Chartered Market Technician (CMT) designation. He has been widely published, writing for Technical Analysis of Stock & Commodities magazine, Investopedia, Benzinga, and others. He runs TradeThatSwing.com, has authored several trading courses and books, coaches individual clients, and regularly trades stocks, currencies, and ETFs.
The time may be right again for buying solar energy stocks, or at least adding them to your watch list. Equities in the industry had become overvalued, experts say, leaving them primed for their current downturn, which was fueled by the shift from growth stocks as interest rates rise, burgeoning input costs amid broader inflation and supply chain constraints that have made solar installations more expensive. Additionally, there were increasing worries that the solar-supportive Build Back Better bill wouldn't pass and uneasiness about potential solar industry rule changes in California. Amid the angst, these seven solar stocks are all worth a good deal less than they were a year ago, perhaps making them ripe for bargain hunting given the bright future ahead for the expanding solar industry.
Raw material cost inflation includes higher prices for aluminum, semiconductors and polysilicon, which is used to make the most common type of solar panels. But for First Solar, the polysilicon shortage is a competitive advantage. The solar cells it makes use cadmium-telluride technology, allowing it to skirt at least one major supply chain bottleneck. Not being reliant on polysilicon also means First Solar isn't reliant on Xinjiang, a region in China where the U.S. says Muslim minorities are forced to work in the industry against their will. Much of the world's polysilicon comes from Xinjiang. First Solar's technology also means its manufacturing process has a smaller carbon footprint than those making panels from polysilicon. \"As a result, we would expect First Solar to increase global market share of solar panels and in some regions command a price premium to more conventional crystalline silicon competitors,\" says Max Slee, portfolio manager with Ecofin.
California has been debating a controversial plan to change the way rooftop solar users are compensated when they provide extra power to the grid in what is known as net metering. That has weighed on Sunrun stock, which provides solar panels and batteries for purchase or lease. But the proposed changes in California have been put on hold, potentially giving shares some breathing room. \"The drop has been overblown,\" says Peter Krull, CEO at Earth Equity Advisors. \"With the indefinite delay in the changes, this is a great opportunity to buy in.\"
There is need in the market for financing solar installations that most banks aren't meeting, Krull says. That should be an opportunity for Sunlight Financial, which should be considered one of the best solar stocks due to its industry role, but the company's shares have fallen sharply since it started trading publicly last year. With such little public market experience under its belt, the company could be risky. But the reward could be big if demand for home solar systems continues to expand. By 2028, U.S. residential solar photovoltaic sales could top $14 billion, up from $9.1 billion in 2020, according to Grand View Research. Although the Build Back Better agenda has stalled, portions of the plan that include support for the solar industry could still pass, likely benefiting companies like Sunlight Financial.
Amid growth in the solar industry, there is a trend toward more systems that combine solar panels with battery storage. One solar components company that has been wading into the battery market is SolarEdge Technologies. \"Attractive global rooftop solar growth and the expansion of SolarEdge's business model toward in-house battery cell manufacturing should deliver attractive earnings growth,\" Slee says. He likes that the company's market is regionally diversified, which means it might be able to weather near-term policy uncertainty in the U.S. better than many other solar energy stocks.
In 2020, SunPower spun off most of its manufacturing assets and now focuses on selling, installing and financing solar panels. It recently agreed to sell its commercial and industrial solutions business to TotalEnergies SE (TTE), as SunPower focuses more on the residential sector after its purchase of residential provider Blue Raven Solar. \"SunPower is doubling down on residential growth,\" CEO Peter Faricy said at the time of the acquisition announcement. SunPower also recently launched a financial services institution to provide loans to American homeowners who want to add solar systems. Strong residential demand has resulted in SunPower's largest-ever sales backlog, the company said in January.
Maxeon Solar Technologies is the company that SunPower spun off. The newer company designs, makes and sells solar panels in more than 100 nations. In the third quarter, its utility-scale business booked its first major project in India and added around 400 megawatts to its backlog of U.S. projects. As of the end of September, nine hedge funds were bullish on the company, an increase from eight the previous quarter, according to Insider Monkey, which tracks hedge fund sentiment. Millennium Management boosted its stake in the company by more than 500% in the third quarter, the insider trading and hedge fund data website says.
Publicly traded solar companies have proven volatile and this year has proven no different. Nevertheless, at the end of the day, diversifying energy infrastructures and resource channels will likely be the ultimate goal. Just remember to consider the long term when looking for solar stocks to buy.
In addition, it offers construction and maintenance services, along with recycling processes for solar-related equipment. First Solar distinguishes itself from the competition through its ultra-thin semiconductor technology, enabling enhanced efficiency and resilience for its modules.
Still, with a current market capitalization of almost $8 billion, FSLR also is one of the larger solar stocks to buy. Down more than 18% against the start of the year, those investors with a patient outlook may want to consider adding First Solar to their portfolios.
SolarEdge Technologies (NASDAQ:SEDG) manufactures and distributes equipment and technology for photovoltaic arrays (multiple solar panels wired together). SolarEdge provides optimization services for these systems, along with monitoring solutions.
Another China-based solar company, Daqo New Energy (NYSE:DQ) is engaged in the manufacture of monocrystalline silicon and polysilicon, primarily for use in solar photovoltaic systems.
Daqo is one of the best-performing solar stocks to buy, with DQ gaining 52% year to date. With even China seemingly pivoting away from Russia-sourced hydrocarbons, DQ is an interesting name to add to your portfolio.
Most recently, home-furnishings retailer Ikea and SunPower announced a collaboration that will make solar energy easier to access. This program has the potential to lower energy costs while enhancing overall sustainability.
Data from Wood Mackenzie Power & Renewables and the Solar Energy Industries Association notes that it took 40 years to reach 1 million solar installations in the U.S., but just three more years to hit 2 million installations. And the forecast for 2021 alone is 3 million installations.
Green energy exchange-traded funds (ETFs) have benefited as investors have piled into solar stocks. This is evidenced in the bellwether Invesco Solar ETF (TAN (opens in new tab)), which is still up more than 50% over the past year even after a sharp cooling-off in early 2021.
Like the supply companies that profited during the gold rush selling picks and shovels to eager prospectors, solar energy offers a similar \"pick-and-shovel\" opportunity. Companies that make components, batteries, the materials to produce panels or the software to manage them are riding the coattails of the inexorable march away from fossil fuels and toward solar power.
Israel-based SolarEdge Technologies (SEDG (opens in new tab), $281.44) makes inverters: a key component of the microgrid that delivers solar energy to where it's needed in homes, schools, businesses, campuses and beyond.
Sentiment has likely tempered on the solar stock thanks to a modest 2% rise in 2020 revenues and a 3% drop in net income. The company's earnings release was mum on the precise reason for this, but declines in both gross and operating margins suggests that as the market for microgrids expands, so too do costs, at least at this stage of the game. 59ce067264