With its boundless potential, solar power remains at the forefront of renewable energy sources, tapping into the sun’s infinite reserves to illuminate homes, electrify businesses, and drive our vehicles forward. Aside from the obvious benefits, solar power shines in its capacity to spark economic growth and job creation. Recognizing its worth, governments across the globe have been rolling out the red carpet for solar energy. A case in point is the Inflation Reduction Act of 2022 is likely to invigorate numerous renewable energy ventures. Especially in the solar sphere, for years to come. Hence, with multiple tailwinds at its back, savvy investors should look for the best solar stocks.
Given the expansive horizon, experts at Allied Market Research forecast a dazzling future for the sector. They predict the global solar industry will surpass a staggering $300 billion by 2032. Although the path might have its moments of eclipse, the long-term trajectory for solar remains incredibly enticing.
First Solar (FSLR)
Renewable energy’s momentum is undeniable, and First Solar (NASDAQ:FSLR) remains a prominent player in the space. Recent results have been impressive, with it posting an impressive 30.6% surge in net sales on a year-over-year basis in the second quarter, reaching $811 million. Moreover, its robust cash reserve of $1.5 billion paves a clear path for future expansion. Additionally, it’s tough to overlook its jaw-dropping 77.8GW backlog, promising steady business through 2030.
There’s been a slight dip in its trading price recently, with the stock down roughly 8% in the past month. Yet, seasoned investors could see this as a golden opportunity, with the stock offering roughly a 34% upside based on analyst estimates. With its fifth U.S. manufacturing facility set to open by 2026 and potential booking opportunities tallying at 78.3 GW, the horizon looks remarkably bright for First Solar. As its book fattens, expect a clearer view of its burgeoning revenue and cash flow.
Altus Power (AMPS)
With Altus Power (NYSE:AMPS), customers get to bask in the benefits of solar energy without the fuss of panel installations or amending their current bills. The company’s innovative business model involves investing in and building large-scale community solar farms. It’s the largest commercial solar owner in the U.S., which boasts a staggering 698 mW spread across 25 states.
But what’s truly electrifying is its growth narrative, with August painting a sunny financial picture with record sales of $46.5 million. The spotlight, however, was on the earnings per share: four cents, which eclipsed the estimated two cents and rebounded from two consecutive quarters of negative earnings. The company’s projects have churned out a phenomenal 4.5 billion kWh of solar energy. To put that into perspective, it’s sufficient to power a whopping 628,000 homes for a year.
With analysts unanimously casting a “buy” recommendation and forecasting a potential 55% jump from the present price, Altus Power seems primed for a radiant future.
Enphase Energy (ENPH)
Touted as a front-runner in the realms of solar, battery storage, and EV charging, Enphase Energy (NASDAQ:ENPH) is arguably one of the best bets in its niche. Although the U.S. solar landscape faces challenges, Enphase’s unique microinverter technology ensures its robust market presence remains undeterred.
The second quarter showcased an impressive 34% revenue surge to $711 million, notably buoyed by global enthusiasm for its IQ8 inverters. Expanding its horizons, Enphase has forayed into European territories. It’s also gearing up for budding markets such as Brazil. Its recent foray into 3D mapping software contracts signifies its commitment to a diversified ecosystem. Additionally, based on analyst estimates, by 2025, sales and earnings per share could potentially double.
Even when confronted with the temporary turbulence in the U.S. solar sector, Enphase’s trajectory is clear. Factors including rising electricity costs, pressing climate worries, and a burgeoning EV market underscore its long-term growth.
SolarEdge Technologies (SEDG)
Hailing from Israel, SolarEdge Technologies (NASDAQ:SEDG) is a trailblazer offering comprehensive solar solutions for residential and commercial needs. As the shadows of conflict darken the European region, notably with Russia’s aggression towards Ukraine, nations such as Germany and Italy are gravitating towards self-sufficiency. Consequently, the appetite for integrated solar solutions, batteries included, has grown immensely.
The company flaunted an all-time high revenue of $991.3 million on the financial front, with solar-specific revenue touching $947.4 million. Coupled with a robust 32% gross margin, its revenue and earnings per share continue on an upward trajectory.
On the stock front, an attractive valuation emerges. Trading at a mere 2.4 times projected sales, it’s hovering around 51.5% below its 5-year average. Also, forward revenue and EBITDA predictions stand at a staggering 33.1% and 37.1%, respectively. For those eyeing growth married with value, SolarEdge presents an enticing montage against the broader backdrop of renewable urgency.
Sunnova Energy International (NOVA)
In a time when “Made in the U.S.A.” is not just a label but a commitment towards shoring, Shoals Technologies (NASDAQ:SHLS) glimmers brightly on the solar horizon. Shoals prides itself as the premier electrical balance system solutions provider, effectively integrating components for solar energy products. Additionally, the company dives into the future with its EV charging solutions.
Dive into the numbers, and Shoals continues to dazzle. Sporting an impressive year-over-year revenue growth of 64.3%, the company isn’t just about top-line growth. It boasts a robust net income margin at a whopping 37.5% year-over-year, eclipsing the sector median by a staggering 506%. While some might hesitate to consider, with its stock trading at SHLK’s 38 times forward earnings, analysts have their gaze firmly set on the horizon. Factoring in the company’s robust earnings growth, the consensus hints at a tantalizing 43.1% upside.
Daqo New Energy (DQ)
Headquartered in Shanghai, Daqo New Energy (NYSE:DQ) has meticulously carved its niche as a top-tier producer of high-purity polysilicon. Moreover, with its effective strategies, Daqo has masterfully aligned itself as an essential supplier to global solar titans. With that, it’s ensuring a steady influx of sales through its long-term supply contracts.
Daqo’s financial metrics paint a rather optimistic portrait. Its sales have surged impressively, leaping from $350 million in 2019 to a forecasted $4 billion in 2023. On top of that, it’s been one of the most cost-effective producers, with a jaw-dropping gross margin year-over-year at 70.3%, dwarfing the sector median by 47%. Also, it generated a stellar 61.4% EBITDA margin, which dwarfs the sector median by 570%. Moreover, the allure of DQ’s undervaluation and growth trajectory is undeniable despite the drop in polysilicon prices.
JinkoSolar (JKS)
JinkoSolar (NYSE:JKS) stands tall as one of the luminaries in the sphere. As the world’s paramount solar products producer and power generator, China’s solar energy foray is on an electrifying ascent. Validating this momentum, the China Photovoltaic Industry Association anticipates an amazing 30% hike in the country’s solar power generation this year.
Cementing its position as a top player in photovoltaic product design and innovation, the firm’s recent second-quarter financials are nothing short of amazing. Its GAAP earnings-per-share of $3.06 surpassed estimates by a hefty $2.26. Couple that with a revenue surge to $4.23 billion, marking a 62.9% year-over-year bump on a year-over-year basis; it beat expectations by a stellar $210 million. The firm dispatched a staggering 18,613 MW this quarter, totaling up the numbers, denoting an impressive 28.5% sequential and 76.7% year-over-year boost.
On the date of publication, Muslim Farooque 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