It has been a rough couple of years for solar stocks, as higher interest rates raised borrowing costs and a rollback in oil prices made investment in alternative energy less attractive in the short term.
As of Jan. 25, leading industry fund Invesco Solar ETF (ticker: TAN) is up about 6% from its November lows as the dust has started to settle. That’s in part because subsidies from the recently passed Inflation Reduction Act (IRA) have helped boost activity through a tax credit that can defray up to 30% of the costs of residential and commercial installations or domestic manufacturing of clean energy. Over the next decade, the Solar Energy Industries Association expects the law to boost solar deployment by 48% over a scenario in which the IRA was not passed.
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If you’re bullish on solar stocks and not afraid of some short-term volatility in the industry, here are seven leading names to consider:
— Array Technologies Inc. (ARRY)
— Canadian Solar Inc. (CSIQ)
— Daqo New Energy Corp. (DQ)
— Enphase Energy Inc. (ENPH)
— First Solar Inc. (FSLR)
— SolarEdge Technologies Inc. (SEDG)
— Sunnova Energy International Inc. (NOVA)
Array Technologies Inc. (ARRY)
Array provides technology solutions that support solar array efficiency by moving panels to track the sun across the sky. This includes both the physical rigs as well as proprietary software that points them in the right direction at the right time. It’s a very specialized business, to be sure, but Array is profitable thanks to its best-in-class gear. Specifically, average analyst estimates call for earnings per share to rise from $1.03 per share in 2023 to $1.27 per share in 2024. Revenue is growing nicely, too, with a projected 20% growth rate in 2024. Like many solar energy companies, performance hasn’t been grand over the past 12 months, but a brighter future may be ahead for ARRY stock with numbers like that.
Market capitalization: $2 billion
Canadian Solar Inc. (CSIQ)
Though headquartered in Canada (as you may have guessed from its name), CSIQ also has significant international operations, including in the fast-growing solar marketplace of China. And unlike some of the other stocks on this list that only produce solar panels or related hardware, CSIQ has a global energy segment that provides the actual power generation from solar farms. Though definitely a smaller firm from a market capitalization perspective, this diversification into a utility-style business model provides it a bit more stability than some of the other solar stocks out there. With analyst projections of 26% revenue growth in 2024, it can still tap into the long-term growth potential of alternative energy solutions.
Market capitalization: $1.5 billion
Daqo New Energy Corp. (DQ)
Daqo is headquartered in China, and while that economy has a greater degree of uncertainty, it is also one of the most dynamic marketplaces for solar in the world. For instance, consultancy Woods Mackenzie published a report in November that stated China will have more than 80% of the world’s solar manufacturing capacity through 2026, and firms like DQ are a big part of that growth story. DQ’s growth rate is impressive, with total revenue of $4.6 billion in 2022 compared with about $300 million back in 2018. If you’re looking to zero in on the potential for the industry outside of the U.S. marketplace, DQ is a good pick.
Market capitalization: $1.3 billion
[READ: 7 Ways to Invest in the Energy Storage Boom.]
Enphase Energy Inc. (ENPH)
Many solar investors are drawn to Enphase, both because it’s larger than many dedicated solar rivals and because of its impressive 1,489% share price increase over the past five years through Jan. 25. Enphase has made a name for itself by specializing in semiconductor products known as “microinverters,” which convert energy captured in those cells into usable energy for homes and businesses. Thanks to this unique role in the solar space, the analyst community is bullish on its long-term outlook going forward. Truist just upgraded the stock in January, and Canaccord Genuity initiated coverage with a “buy” rating in the past few weeks, too.
Market capitalization: $14.5 billion
First Solar Inc. (FSLR)
Founded in 1999, First Solar is one of the largest and most established solar companies on Wall Street. It manufactures solar modules, mainly serving large-scale developers and operators of utilities or independent power grids for commercial and industrial use. The gloomy outlook for the industry in 2023 didn’t take as much of a toll on FSLR, thanks to its focus on bigger customers instead of residential end-users, and its powerful position in the industry ensures it can weather short-term volatility as it looks to the future of alternative energy.
Market capitalization: $15.8 billion
SolarEdge Technologies Inc. (SEDG)
SolarEdge sells current inverter systems for solar installations, allowing the panels to produce alternating current, or AC, power that is transmissible across the energy grid. Unfortunately, the headwinds for the solar industry have been compounded by the fact that this mid-cap solar company is headquartered in Israel. As a result, shares are down a gut-wrenching 76% in the past 12 months. But for aggressive investors banking on the future of alternative energy, this could be a risky but profitable long-term bet if SEDG gets back on its feet in the coming months.
Market capitalization: $3.9 billion
Sunnova Energy International Inc. (NOVA)
Sunnova installs solar arrays and energy storage solutions for homeowners and small businesses. It’s modest in size, with only about 386,000 customers and current operations in the red as it looks to invest heavily in future growth. That growth seems to be materializing, however, as analysts expect more than $1 billion in total revenue in 2024 — more than 36% higher than expected 2023 sales. There’s more volatility with a small and unprofitable stock, and there’s also uncertainty around its reliance on consumer spending trends rather than enterprise spending from deep-pocketed corporations. But if you want to get in on the ground floor of the residential solar rollout, NOVA is a good option to consider in 2024.
Market capitalization: $1.3 billion
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7 Best Solar Stocks to Buy Now originally appeared on usnews.com
Update 01/26/24: This story was previously published at an earlier date and has been updated with new information.
