What are the best solar stocks to own? Well, there are a lot of solid stocks to choose from in 2021.
In this article we examine the best solar stocks to buy!
The solar energy industry is growing exponentially.
Across party lines in the United States and especially in the international sector, the move toward renewable energy is becoming more mainstream and solar stocks could be set to benefit!
The statistics are undeniable. According to the International Energy Agency, global renewable energy grew 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 US).
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 on the industry, over the last decade alone, solar energy has witnessed an average annual growth rate of 49%.
This growth is directly linked to strong federal policies like the Solar Investment Tax Credit.
Plus, rapidly declining installation costs and increasing demand across the private and public sectors for clean electricity.
There are now more than 85 gigawatts (GW) 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, which is 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.
What was the catalyst? Well, the tax credits had something to do with it, 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 US 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 is leading the way with more than 390MW of commercial capacity and Amazon 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 forthcoming infrastructure bill will provide support to many solar companies and other sources of clean energy.
If this bill passes, it could be a huge boost to an already growing industry.
So, if you are convinced of the growth of solar energy, let’s look at the best solar stocks to own right now.
Best Solar Stocks To Buy
Now, before we talk about stocks, let’s go over a few of our ground rules about the industry, as well as the stocks we are focusing on and why.
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 its so important to do a thorough analysis before jumping in.
There are also some companies that dabble in solar energy or own subsidiaries in the solar power industry, but we are mostly focused here on solar stock pure plays.
Best Solar Power Stocks
Invesco Solar ETF (NYSE: TAN)
The first commodity we’re going to discuss isn’t actually a stock. The Invesco Solar ETF is a fund that tracks the performance of 37 different companies in the solar energy space.
The Invesco Solar ETF is a great way to invest in the solar industry without investing in just one stock.
Over the past year, the fund has reflected the huge boom in solar power.
After a dip in May, the stock has been on a slow but steady upward trajectory for the past several months.
If you’re unsure of exactly which solar stocks to buy, this ETF is a relatively safe way to add solar energy to your investment portfolio.
First Solar, Inc. (NASDAQ: FSLR)
First Solar is one of the most prominent solar companies on the market right now.
They manufacture solar panels and offer support and maintenance for solar power operations.
The company was founded in 1990 and has built a very stable client base during their 30 years in the business.
Unlike many burgeoning solar companies, they have a rock-solid balance sheet that can handle the challenges of an economic downturn.
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They’ve taken steps to streamline their operations, which has resulted in a huge cash balance and the potential for expansion.
Despite the challenges of COVID-19, First Solar performed very well in 2020.
They had a backlog of orders throughout 2020 and their share price increased dramatically, peaking in December 2020.
After a slight dip at the beginning of 2021, First Solar’s share price has slowly been improving over the last few months.
Despite this growth, First Solar’s price-to-earnings ratio is still relatively low, which indicates that the stock is still fairly 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.
JinkoSolar Holding Co. (NYSE: JKS)
JinkoSolar is one of the world’s largest solar panel manufacturers. They’re currently based in Shanghai, China, but have six production facilities all over the world.
The company’s global presence and diversified client base already makes them a strong stock pick in the solar industry.
However, this stock has gone up in the last few weeks, catching the market’s eye.
This is a result of one of JinkoSolar’s subsidiaries going public in China. This will improve their cash flow and could help them expand their business even further.
With the money from the IPO, JinkoSolar can expand their production capability. Once these improvements are complete, it could increase their revenue.
On top of their manufacturing operations, JinkoSolar also has one of the largest solar research and development facilities in the world.
One of JinkoSolar’s solar panels recently set a record for solar conversion efficiency, showing that they are truly an industry leader.
JinkoSolar plays an integral part in the global solar market, making them a promising option for any investment portfolio.
Best Solar Stocks To Buy
Enphase Energy, Inc. (NASDAQ: ENPH)
Enphase Energy focuses on home energy solutions, most notably solar microinverters. These inverters convert solar power from a direct current to alternating current, so they can power a wide range of devices.
These products have already sold very well in North American, and now the company is expanding into Europe and Australia.
A recent press release states, “With a maximum output power of 366 volt-amperes (VA) and 96.5% EU efficiency. Enphase IQ 7A microinverters can generate up to 14% more power than any previous Enphase IQ microinverters. IQ 7A microinverters are software-defined.”
These products are some of the most exciting in the solar industry right now.
By converting solar energy so it is compatible with AC-powered devices, they are making sustainable power accessible to a broader range of consumers.
Like many other solar stocks, Enphase has been on a strong upward trajectory over the past several months. If they can keep up their strong sales volume, their shares have the potential to push even higher.
Sunrun Inc. (NASDAQ: RUN)
Sunrun manufactures, installs, and sells solar panels to residential solar energy customers.
On that alone, the company is not too exciting.
But they recently purchased Vivint Solar with an all-stock transaction.
“This is a transformational opportunity to generate consumer and shareholder value, realize annual cost synergies and bring cleaner, affordable energy to more homes,” Sunrun said in a news release.
The company’s market cap is now over $9 billion.
Their share price saw an increase of over 400 percent in 2020.
Like many other solar stocks, it has since dropped down, giving investors the opportunity to buy the dip.
RUN is exciting Wall Street stock traders.
The company entity increases the customer base to half a million customers and an estimated $8,000 in value per customer.
The Vivint acquisition was completed in October 2020. This created the largest consumer-facing solar company in the US.
This is definitely a stock to keep your eye on if you’re interested in consumer solar.
NextEra Energy Inc. (NEE)
NextEra Energy is one of the largest energy companies in North America.
Unlike many of the other companies on this list, NextEra does not only focus on solar energy. They also distribute wind power, as well as 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 distributes electricity throughout the United States and Canada.
Because their services are considered essential, they are a good stock to buy in a volatile economy. They are less likely to struggle than other stocks because consumers will still need electricity.
NextEra’s commitment to sustainable energy sets them apart from other electricity distributors in the United States. This makes them a promising pick for the future.
They also currently have a dividend yield of 2.05 percent, which adds extra appeal for income investors.
Brookfield Renewable Partners (NYSE: BEP)
Brookfield is a Canadian renewable energy company with operations around the world.
They have a diverse portfolio that includes solar energy as well as hydropower and wind power.
Diverse streams of income are good for any business, because it means they’re not relying specifically on one product or service to keep their balance sheet steady.
Solar energy is a relatively new part of Brookfield’s business, but it’s something they’re investing in heavily.
They recently completed a deal with a utility company called Exelon to acquire a huge stream of solar power across 600 solar sites in the US.
A large portion of the projects that Brookfield has in development right now are solar projects.
This is because solar projects are relatively affordable to develop and can generate huge financial returns over time.
It’s also important to note that Brookfield is a good dividend stock.
They currently have a dividend yield of 4.77 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.
The current political climate in the US also bodes very well for solar companies.
Democrats have been wanting to position the US as a leader in green energy solutions.
With the Biden administration in the White House and Democrats controlling both branches of Congress, things are looking good for solar energy right now.
Climate change is a very important global issue right now.
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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