Solar stocks are back in the limelight, and these seven look tempting
- Solar stocks have gained considerable momentum on the heels of the climate investment decision by Congress.
- Canadian Solar (CSIQ): Reported a whopping 62% year-over-year jump in revenue, driven by robust growth in its battery storage solutions business.
- Enphase Energy (ENPH): Anticipates international sales accounting for roughly half of total revenue in the coming years.
- First Solar (FSLR): Focused on expanding its manufacturing capacity of next-generation Series 7 panels with two new plants in the U.S. and India.
- Shoals Technologies Group (SHLS): Backlog and awarded orders surged 63% year-over-year to a record $327 million.
- Solaredge Technologies (SEDG): Revenue generated from the solar segment soared 59% year over year to a record $687.6 million.
- Sunnova Energy International (NOVA): More than doubled Q2 revenue, fueled by the addition of 17,300 new customers during the quarter.
- SunPower (SPWR): Soaring electricity prices have contributed to a 51% year-over-year increase in customers.
Investors looking for solar stocks to buy may have their pick right now. Solar stocks have gained significant momentum over the past few months despite macroeconomic headwinds. For instance, the Invesco Solar ETF (NYSEARCA:TAN) is up more than 10% so far in 2022.
A significant catalyst has been the agreement between Ford (NYSE:F) and DTE Energy (NYSE:DTE) for the largest renewable energy purchase from a utility stateside. As a result, Ford will attribute all its electricity supply in Michigan to clean energy.
DTE Energy is expected to provide 650 megawatts of new solar energy capacity for the automaker by 2025. Thus, the total amount of installed solar in Michigan will increase by almost 70%.
Meanwhile, the Inflation Reduction Act of 2022 offers $369 billion to fight climate change over the course of a decade, providing strong tailwinds among the most interesting solar stocks to buy. It is the most significant climate investment step ever taken by Congress. Many analysts regard it as a gamechanger for the domestic manufacturing of solar panels.
The Energy Information Administration (EIA) forecasts that solar panel installations will account for roughly half the country’s electricity production capacity growth in 2022. In addition, Precedence Research estimates the solar industry is expected to grow at a compounded annual growth rate (CAGR) of well over 7% from 2021 to 2030.
Against this backdrop, here are the seven solar stocks to buy that are primed to gain further traction through the second half of the year.
|NOVA||Sunnova Energy Intl.||$24.68|
Canadian Solar (CSIQ)
52-week range: $22.15 – $47.69
Canadian Solar (NASDAQ:CSIQ) provides solar power products and services. It manufactures solar cells and modules for a wide range of clients. It is one of the more reliable solar stocks to buy in the manufacturing space.
The Canadian green energy play issued Q2 results on Aug. 18. Revenue grew 62% year over year to $2.31 billion. Net earnings jumped to $1.07 per diluted share, up from 18 cents a year ago. Cash and equivalents ended the quarter at $1.05 billion.
The top-line growth was impressive. Rising project sales, solar shipment volumes, and growth in the battery storage solutions business contributed to this expansion.
CSIQ shares soared after the company hiked its revenue guidance for 2022. Management projects total revenue in 2022 to come in between $7.5 billion and $8 billion, up from the previous estimate of between $7 billion and $7.5 billion.
So far in 2022, CSIQ stock is up 40%. Shares are trading at 15.8 times forward earnings and 0.5 times sales. The 12-month median price forecast for CSIQ stock stands at $45.
Enphase Energy (ENPH)
52-week range: $113.40 – $308.88
Enphase Energy (NASDAQ:ENPH) offers home energy management solutions, combining solar generation, energy storage and monitoring solutions on a single platform.
Its IQ8 microinverter enables customers to conveniently switch to and from grid-supplied electricity, as well as store excess energy.
Enphase issued Q2 financials on July 26. Revenue increased 68% year over year to $530.2 million. Adjusted diluted earnings per share came in at $1.07, up from 53 cents in the prior-year quarter.
In addition, Enphase generated a free cash flow of $192 million. Cash, equivalents, and marketable securities ended the quarter at $1.25 billion.
Investors noted that the demand for solar power equipment is booming, driven by solid growth in the residential solar market. The company shipped 18% more microinverters and 10% more battery systems compared to Q1.
Meanwhile, revenue derived from its European segment soared by 69%. The war in Ukraine and Russia’s decision to cut natural gas shipments have urged the region to explore other energy sources. Management forecasts revenue growing by over 60% in 2022.
ENPH stock is up 54% year to date. Shares are trading at 84 times forward earnings and 24 times sales. In other words, Enphase Energy has a rich valuation. Analysts’ 12-month median price forecast for Enphase stock stands at $280.
First Solar (FSLR)
52-week range: $59.60 – $123.12
First Solar (NASDAQ:FSLR) produces thin-film solar panels and systems.
It is well known for its ultra-thin solar panels that generate more usable energy than competing technologies. This company’s staying power alone makes it one of the more reliable solar stocks to buy.
The Arizona-based solar play announced Q2 financials on July 28. Revenue declined by 1% year over year to $621 million. The company posted income per diluted share of 52 cents, down from 77 cents in the prior-year quarter. Cash and equivalents ended the quarter at $1.9 billion.
Management noted production is sold out through the end of next year at solid pricing. The company reported a record backlog of over 44 GWs.
The company is expanding its manufacturing capacity in the U.S. and India. The 3.3 gigawatt Ohio facility makes it the largest fully integrated solar manufacturing complex outside China.
Meanwhile, the recent passage of the Inflation Reduction Act offers further tailwinds for growth. The $37 billion in clean manufacturing tax credits should accelerate First Solar’s continued expansion stateside.
FSLR stock has climbed more than 54% over the past month. It is currently up 32% year to date. Shares are changing hands at 5.1 times sales. The 12-month median price forecast for FSLR stock is at $117.50.
Shoals Technologies (SHLS)
52-week range: $9.58 – $36.86
Shoals Technologies (NASDAQ:SHLS) supplies electrical balance of systems (eBOS) solutions for solar, storage, and electric vehicle (EV) charging infrastructure. Its diversity makes it one of the solar stocks to buy for the future.
Industry analysts note, “BOS refers to all components of a PV system other than the modules. In addition to inverters and racking, this includes the cables/wires, switches, enclosures, fuses, ground fault detectors, and more.”
eBOS helps transfer electric current from a solar panel to an inverter that takes it off to the grid. In 2021, 50% of new solar installations in the U.S. had Shoals’ eBOS solutions.
The niche solar play announced Q2 metrics on July 28. Revenue grew 23% year over year to a record $73.5 million.
Adjusted diluted earnings per share stood at 7 cents, down from 9 cents in the prior-year period. Cash and equivalents ended the quarter at $23.8 million.
Backlog and awarded orders surged 63% year over year to a record $327.2 million. In March, the company opened a new facility in Portland that doubles the company’s eBOS manufacturing capacity.
SHLS stock is up 6% year to date. Shares are trading at 88 times forward earnings and 11.25 times sales. Wall Street’s 12-month median price forecast for Shoals stock stands at $28.50.
Solaredge Technologies (SEDG)
52-week range: $200.86 – $389.71
Solaredge Technologies (NASDAQ:SEDG) develops power optimizers and inverter systems that maximize the power generated by solar panels.
The company manages monitoring and energy storage systems, helping to reduce the cost of energy generated by these systems. This kind of ancillary company is among one of the more exciting solar stocks to buy.
The Israel-headquartered solar technology provider released Q2 results on Aug 2. Revenue increased 11% year over year to $727.8 million. Adjusted net earnings came in at 95 cents per diluted share, down from $1.28 in the prior-year period. Cash, equivalents, and marketable securities ended the period at $973.3 million.
Revenue generated from the solar segment was a record $687.6 million, up 59% year over year from $431.5 million a year ago.
Management anticipates Q3 sales to come in the range of $810 million to $840 million, representing 59% year-over-year growth at the midpoint of guidance.
So far in 2022, SEDG stock is up 2%. Shares are changing hands at 51.8 times forward earnings and 7.2 times sales. The 12-month median price forecast for SEDG stock stands at $377.
Sunnova Energy International (NOVA)
52-week range: $12.47 – $46.40
Sunnova Energy International (NYSE:NOVA) provides solar energy solutions to the residential property market.
The company operates in more than 30 states, offering operations, maintenance, monitoring and onsite power optimization services. Its diversity makes it one of the more intriguing solar stocks to buy.
The home solar energy installer announced Q2 financials on July 27. Revenue came in at $147 million, more than doubling from $67 million a year ago.
The bottom line narrowed to a net loss of 32 cents per share, down from 57 cents in the year-ago quarter. Cash and equivalents ended the period at $208 million.
The addition of 17,300 new customers contributed to the impressive top-line growth. Management also highlighted that cost per customer is declining faster than expected.
“High inflation and overall economic distress is further reinforcing the value of the cost savings and predictable nature of the essential energy services Sunnova provides,” CEO William Berger said.
So far in 2022, NOVA stock is down 14%. Shares are trading at 8.2 times sales. Wall Street’s 12-month median price forecast for Sunnova Energy stands at $35.
52-week range: $12.78 – $34.61
SunPower (NASDAQ:SPWR) is an integrated solar module manufacturer, developing, financing, and operating large grid-connected PV power plants.
The company recently sold its commercial and industrial solutions (CIS) business to France’s TotalEnergies (NYSE:TTE).
The Californian solar play released Q2 results in early August. Revenue increased 60% year over year to $417.8 million. Adjusted net loss stood at 3 cents loss per diluted share, down from 7 cents in the prior-year quarter. Cash and equivalents ended the quarter at $206 million.
SunPower added a record 19,700 customers in the second quarter, representing 51% year-over-year growth.
In addition, bookings jumped, reaching a backlog of 53,000 customers. Meanwhile, SunPower announced a strategic relationship with IKEA U.S. to introduce solar and storage to a new consumer market and improve access to renewable energy.
SPWR stock price is up almost 15% year to date. Shares are currently valued at 82 times forward earnings and 2.8 times sales. Finally, the 12-month median price forecast for SPWR stock stands at $22.
This post originally appeared at InvestorPlace.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.