Environment conscious consumers want eco-friendly alternatives to fossil fuels, and the attitude shift is driving demand for renewable energy options. Solar is one of the most efficient forms of renewable energy, and the sector has expanded drastically over the past decade. As a result, solar stocks could be primed for a big future, but picking the best solar energy stocks to buy for 2020 is no easy task.
Investing In Solar Stocks
The solar space is still relatively young, so many solar energy stocks are more volatile in comparison to traditional energy stocks. As always, investors should aim to buy low and sell high. However, solar stocks tend to be very volatile, so be prepared.
Most solar companies rely heavily on government subsidies. As a result, politics play a major role in influencing prices. Government policies can make or break stocks for solar energy, so you need to do your research if you want to play in this sector. If the wrong candidate wins an election, it could torpedo the entire sector. This goes for state government too, so you need to be aware of where your investments operate and the political scene in those regions.
The demand for solar energy will most likely rise over the coming years. Building positions in solar stocks could be an excellent play for long-term investors. However, make sure you’re committed before you place your ‘buy’ order. The sector is volatile and you need to be patient to be successful. Choosing the best solar energy stocks starts with identifying stable companies that are best equipped for long-term success.
Best Solar Stocks To Buy Now
The solar energy sector has been booming over the past few years because of the rising need for renewable energy. With several options available to investors, it becomes confusing to choose the best solar stocks to buy. However, we will discuss some of the leading stocks in the solar energy generation industry.
Here are the best solar stocks we believe investors should buy in 2020. These stocks could perform excellently over the coming year.
Tesla is known for manufacturing electric vehicles. However, the company acquired SolarCity for $2.6 billion in 2016. Tesla CEO Elon Musk is determined to eliminate fossil fuel usage on Earth, so it’s no surprise that Tesla acquired a solar energy company. Now, Tesla is actively involved in several the solar sector and currently sells several solar-related products, including Powerwall and Solarglass Roof.
SolarCity is currently the largest solar energy provider in the United States. The company wants to make clean solar energy available to everyone. At the moment, SolarCity’s customer base includes more than 300,000 homeowners and over 400 schools and universities. That doesn’t even include the thousands of businesses and government agencies that use the company’s solar devices.
The stock could be one of the leading performers in the industry this year. Late last year, SolarCity appointed Yogesh Chand as the chief operating officer. Chand, who previously worked at Pulse Energy, is coming to SolarCity with over two decades of experience. He is known for is active strategic management and helping market products both at home and abroad.
Unfortunately, this is not a pure-play solar stock because it’s tied in with Tesla’s electric vehicle business, which has been notoriously volatile over the past few years. If you want to get into this solar energy stock, you’ll have to deal with the potential risks associated with the auto business too.
First Solar Inc. (FSLR)
First Solar is an American solar panel stock known for manufacturing rigid, thin-film modules for solar panels. The company also provides utility-scale PV power plants and supporting services, such as finance, construction, maintenance, and end-of-life panel recycling.
The company designs, manufactures, and sells cadmium-telluride solar modules, which are used to convert sunlight into electricity. First Solar’s ‘Systems’ segment provides turn-key photovoltaic solar power systems for plant operators. The company also assists with solar project development, engineering, procurement, and construction.
First Solar is an S&P 500 stock and currently has the best balance sheet in the solar energy sector. The company was the subject of a recent class-action lawsuit, however, it settled the case not too long ago. Now, the company can focus on growth and other aspects of its businesses.
Due to its strong stance in the solar energy sector, First Solar remains one of the best solar stocks you can buy for 2020.
SunPower Corporation (SPWR)
This California-based energy company designs and manufactures crystalline silicon photovoltaic cells and solar panels. The panels developed by SunPower are based on an all-back-contact solar cell. It’s one of the leading solar panel stocks on the market.
The company’s primary customers include governments, homeowners, and businesses. SunPower is one of the oldest solar energy companies and generates over 3 gigawatts of electricity from its solar panels across the globe.
Its market cap is around $1 billion, which is below that of Tesla and First Solar. However, SunPower remains one of the best solar panel stocks available. In December 2019, SunPower announced a plan to restructure its operations to reduce costs. The plan includes cutting 3% of its global workforce this year.
As part of the restructuring plan, SunPower will spin-off its Maxeon Solar segment. However, the two companies will continue to be strategically aligned and share common ownership. The move will result in some restructuring costs, but it could make SunPower much more efficient. Investors should take a close look at this solar panel stock.
Solaredge Technologies Inc. (SEDG)
Solaredge was one of the best performing solar stocks of 2019, gaining 170% over the past 12 months. It could continue on that trajectory this year, so it remains one of the best solar stocks to buy in 2020.
This Israel-based company is listed on the NASDAQ. Solaredge produces power optimizers, solar inverters, and monitoring systems for photovoltaic arrays. These products help boost energy output via module-level Maximum Power Point Tracking.
Solaredge released a wide range of products and services that helped it become a leading renewable energy stock in 2019. Its residential StorEdge product and other innovations could help Solaredge carry its momentum into the coming year.
Vivint Solar Inc. (VSLR)
Vivint is a Utah-based solar energy company that has been around since 2011. The company is a residential solar energy provider that installs, designs, and maintains photovoltaic systems. At the moment, the company operates in 24 states across the United States.
What makes Vivint an exciting solar stock is the availability of several options for consumers. The fact that they are expanding their services means that there is enough room for growth for Vivint over the coming year.
Vivint is focusing on growth in 2020. The company recently obtained a $200 million loan to fund its expansion efforts. The funds are set aside for the purchase of safe-harbor equipment and other strategic efforts.
Their focus on growth in 2020 and beyond makes Vivint one of the best solar stocks to buy this year. For those looking to enter the solar sector, Vivint should be on your watchlist.
Sunrun Inc. (RUN)
Another California-based solar energy stock, Sunrun provides solar electricity for residential customers. They also offer the Brightbox Battery, which makes it easy for consumers to store and manage their solar energy.
Sunrun is currently expanding its services, so it could be on the path to significant growth in the future. A new California law requires all new homes to have enough solar panels to satisfy their electricity needs. The law officially went into effect in 2020, and it applies to all homes under four stories tall. Sunrun is talking with several leading homebuilders in an effort to nail down supply contracts. They already have some deals in place but, if they can secure more, it will be a big lift for share prices.
The company already has a deal with Citadel Roofing & Solar. Sunrun will provide roofing, solar systems, installation, and financing. Partnerships like these could lead to strong revenue growth for Sunrun in 2020.
Enphase Energy Inc. (ENPH)
The solar energy stock designs and manufactures software-driven home energy solutions. Enphase’s product line includes solar generation, web-based monitoring and control, and home energy storage.
The company’s revolutionary microinverter technology is transforming the solar sector. Enphase currently has the only truly integrated solar-plus-storage solution on the market.
Enphase’s microinverters are flexible, reliable, and manageable. With over 23 million microinverters sold over the years, there is a strong demand for these cutting-edge devices. Enphase could land more partnerships soon, and the deals could create significant revenue growth.
The Solar Energy Market
Renewable energy is slowly replacing fossil fuels in several parts of the world. The industry expanded significantly over the past decade, and it’s likely to continue on that path for some time. In 2017, the renewable energy market was worth over $900 billion, and some estimates predict it will grow to $1.5 trillion by 2025.
In addition, environmental concerns led several government bodies to enact climate change policies that limit fossil fuel consumption. As a result, renewable energy stocks could benefit from growing demand over the next few decades. Solar is clean, cheap, and efficient, so solar energy stocks will be at the forefront of the renewable energy revolution.
Renewable Energy Investment
Many countries are recognizing the harmful effects of fossil fuels, so they want to shift to more eco-friendly alternatives. The demand for renewable energy systems could also grow as a result. Stringent government regulations are also forcing many countries to shift to renewable energy sources so they can meet their emissions goals. In the US, renewable energy accounted for 23% of power generation in 2019. That’s enough to surpass coal’s 20% market share.
According to Marlene Motyka, Deloitte’s Global and US Renewable Energy Leader, the renewable energy market will become more competitive in 2020. More consumers want to use renewable energy sources, so the market could expand over the coming years.
Demand for Solar Power
Solar energy is one of the efficient renewable energy resources. The sun is an inexhaustible and source of free renewable energy. In 2018, the global solar energy market was worth around $52 billion. This figure is set to increase to $223 billion by 2026.
Many experts believe that solar energy will be the premier renewable energy source in the coming years. The demand for solar energy is on the rise, and it’s likely to surge higher in a few years.
In 2015, the global solar energy consumption was around 51 gigawatts. By 2019, the consumption has surged to 114.5 gigawatts. However, solar energy consumption could increase by 10 gigawatts over the next five years.
Solar energy costs decreased significantly over the past few years, mostly due to improvements in technology. China, the United States, and India are leading the charge for solar energy. These three countries have the highest demand for solar panels.
If you buy into a few solar stocks now, it could pay off big in a few years. Solar energy stocks could benefit from near-certain demand growth in the coming years.
Best Solar Stocks: Closing Thoughts
Ultimately, the solar energy market seems destined for a drastic expansion in the near future. As a result, it might be the perfect time to buy solar stocks. If you want to stay informed on solar energy stocks and the renewable energy sector, sign up for Stock Dork Alerts. We’ll keep you informed on everything Wall Street. Plus, we write our reports in plain English, so they’re easy to understand. Sign up today and get our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.