Across party lines in the United States and especially in the international sector, the move toward renewable energy is becoming more mainstream.
The best solar stocks could be set to benefit from this push.
The statistics are hard to deny.
According to the International Energy Agency, global renewable energy has grown by 1,200 gigawatts over the last five years.
And 60% of that energy growth is attributed to solar energy (1,200 gigawatts more than exceeds the average peak grid demand for the entire U.S.).
Here are some other facts you should know about the industry.
- By 2026, the global solar industry is projected to be worth $223.3 billion.
- The cost of solar energy has plunged 90% over the past decade.
For a 50-foot view of the industry, solar energy has witnessed an average annual growth rate of 49% over the last decade alone.
This growth is directly linked to strong federal policies like the Solar Investment Tax Credit.
In addition, there are rapidly declining installation costs and an increase in demand across private and public sectors for clean electricity.
There are now more than 85 gigawatts (G.W.) of solar capacity installed nationwide, enough to power 16 million homes.
Why Solar Stocks Should Be On Your Radar
If these numbers were not impressive enough for you, consider the implications of solar power on the job market.
The solar industry is just flat-out putting more people to work, another sign of a robust sector.
At the end of 2019, a quarter of a million Americans worked in solar, while the sector generated $18.7 billion in investment.
Tax credits were a part of this catalyst, but falling equipment and infrastructure prices have also made a huge difference.
An average-sized residential system has dropped from a pre-incentive price of $40,000 in 2010 to roughly $20,000 today.
A few years ago, solar power was only really available in sunny states like California and Florida.
Today, solar power is available in most U.S. cities and states.
While most of these numbers above reflect residential growth, solar power has also helped Fortune 500 companies save money.
Apple, Amazon, Target, and Walmart have all invested heavily in solar facilities at various locations across the country.
Apple leads the way with more than 390MW of commercial capacity, and Amazon is close behind with 329 MWs.
In recent years, the public has grown to realize the importance of investing in clean energy sources and protecting our planet.
President Biden’s recent infrastructure bill provides support to many solar companies and other sources of clean energy.
Best Solar Stocks To Buy
Before we talk about stocks, let’s go over a few of our ground rules about the industry.
First, not every solar company is built to make money for shareholders.
Some of these companies are staying afloat on subsidies or money from venture capitalist dollars which is why it’s so important to do a thorough analysis before jumping in.
While some companies dabble in solar energy or own subsidiaries in the solar power industry, we primarily focus on pure solar stock plays.
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Best Solar Power Stocks
SolarEdge Technologies, Inc. (NASDAQ: SEDG)
SolarEdge Technologies is headquartered in Israel.
The company’s primary focus is on inverters, which take solar energy and deliver it to where it’s needed in homes, businesses, and wherever else solar power is used.
It also works with power optimizers and other smart solutions for maximizing the yield from solar panels.
SolarEdge has been able to get a foothold in a cutthroat market by manufacturing optimizers for a lower cost than the competition.
The team is also always looking for innovations to improve output in the solar energy space.
The company comes out of the second quarter of 2021 with record revenue numbers and continued improvement in market share.
The stock has seen 1,550% growth over the last five years and saw an all-time high at the beginning of 2021.
Share price has dropped around 20% since then, likely due to concerns over interest rates.
There’s a good chance SolarEdge is undervalued right now, making it a good investment opportunity.
Of its worldwide business, the United States accounts for approximately 40%.
The United States’ push to become more energy efficient should only help these numbers continue to rise.
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First Solar, Inc. (NASDAQ: FSLR)
First Solar is one of the most prominent solar companies on the market right now.
It manufactures solar panels and offers support and maintenance for solar power operations.
The company was founded in 1990 and has built a very stable client base during its 30 years in the business.
Its business spans the globe, providing solutions in North America, Europe, Asia, and Australia.
During the 2020 pandemic, First Solar took steps to streamline its operations, resulting in a huge cash balance and the potential for expansion.
Despite the challenges of COVID-19, First Solar performed very well that year.
They had a backlog of orders throughout 2020, and their share price increased dramatically, peaking in January 2021.
Despite this growth, First Solar’s price-to-earnings ratio is still relatively low, which indicates that the stock is still reasonably cheap.
The company’s financial stability also makes them a very attractive pick.
While they do not currently pay a dividend, their excess cash reserves mean they could easily offer one in the future.
Daqo New Energy Corp. (NYSE: D.Q.)
Daqo New Energy Corp. is a China-based company that creates polysilicon used in the construction of solar panels.
With China’s push to go green, the country is now the global leader in solar panel production.
The company can also capitalize on the rising price of polysilicon resulting from an increase in demand.
Just this year, the price of polysilicon has more than doubled.
The group has also been able to lower its operating expenses over the last year, a catalyst for net income.
Both of these make Daqo look quite profitable as 2021 rolls on.
Daqo New Energy Corp. rose like a phoenix out of 2020, seeing a massive share price spike in February of this year.
Although its share price has trailed some since then, the company still sees a 220% increase from last year.
All signs point to Daqo continuing to be a strong contender in the polysilicon space and a solid stock to have in your portfolio.
Best Solar Stocks To Buy
Enphase Energy, Inc. (NASDAQ: ENPH)
Enphase Energy focuses on home energy solutions and is best known for semiconductor-based microinverters.
These microinverters convert solar power from direct current to alternating current to power a wide range of devices.
By converting solar energy to be compatible with AC-powered devices, sustainable power is accessible to a broader range of consumers.
These products have already sold very well in North America, and now the company is expanding into Europe and Australia.
As of May 2021, Enphase has been looking to reclaim some of its wayward shares.
Like many other solar stocks, Enphase has been on a solid upward trajectory through the beginning of 2021.
Although things have leveled off a bit, if the company can keep up its strong sales volume, its shares have the potential to push even higher.
Sunrun Inc. (NASDAQ: RUN)
Sunrun manufactures, installs, and sells solar energy systems to residential solar energy customers.
The company currently focuses all its attention on the U.S. market but hopes to expand outward in the future.
In the summer of 2020, Sunrun purchased Vivint Solar with an all-stock transaction.
This acquisition created the largest consumer-facing solar company in the U.S.
Like most other companies on this list, Sunrun saw explosive growth at the end of 2021 as the U.S. looked more toward solar energy.
Its stock price has been down significantly since then as the world looks to see what changes the Biden administration will bring.
This drop could be a chance for investors to buy the dip, making Sunrun a stock to keep your eye on if you’re interested in consumer solar.
NextEra Energy Inc. (NYSE: NEE)
NextEra Energy is one of the largest energy companies in North America, with a headquarters in Florida.
The company distributes electricity throughout the United States and Canada.
Unlike many of the other companies on this list, NextEra does not only focus on solar energy.
It also distributes wind power and some power from fossil fuels.
This stock is a good choice for those who want to invest in solar energy but do not want a solar pure play.
NextEra’s commitment to sustainable energy sets them apart from other electricity distributors in the United States and makes them a promising pick for the future.
The company’s share price continues to see a gradual rise, up nearly 200% over the last five years.
NextEra also currently has a dividend yield of 1.8 percent, which adds extra appeal for income investors.
Brookfield Renewable Partners (NYSE: BEP)
Brookfield is a Canadian renewable energy company with operations in both North America and Europe.
They have a diverse portfolio that includes solar energy as well as hydropower and wind power.
Diverse income streams are good for any business because it means they’re not relying specifically on one product or service to keep their balance sheet steady.
A global leader in the hydropower space, Brookfield estimates solar energy will make up the majority of its energy production by the end of the decade.
Solar energy is a relatively new part of Brookfield’s business, but it’s something they’re investing in heavily.
The company recently completed a deal with a utility company called Exelon to acquire a massive stream of solar power across 600 solar sites in the U.S.
A large portion of Brookfield’s projects in development right now are solar.
These projects are relatively affordable to develop and can generate substantial financial returns over time.
It’s also important to note that Brookfield is a good dividend stock with a current yield of 2.94 percent.
They’ve committed to regularly increasing their dividend yield, and their balance sheet currently supports this.
Best Solar Stocks: Conclusion
These are some of the best solar stocks on Wall Street right now.
There is plenty of upside in the sector and plenty of room for growth.
Overall, solar energy only accounts for around 2% of the total grid usage right now.
That number is primed to go up in the near future.
The current political climate in the U.S. also bodes very well for solar companies.
Democrats desire to position the U.S. as a leader in green energy solutions.
We can expect to see solar stocks go up in price even more over the next few years as more residential and commercial properties switch to solar power.
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