Boosting the share of electricity generated from solar power is a key objective in the battle against global climate change. As a result, solar power companies are seeing massive growth in sales, and the global solar market is projected to expand at a rate of approximately 7% annually through 2030.
Among the solar companies analyzed in our research, Daqo has the highest three-year annualized earnings per shares (EPS) and sales growth metrics. It also features a breathtakingly low forward price/earnings ratio(P/E) of 2.3, suggesting that the stock is very cheap.
SolarEdge designs and sells the power transmission equipment that makes it possible to get solar-generated electricity onto the electric power grid. That means things like inverters and monitoring systems used in solar installations.
We began our search for the best solar power stocks by compiling a list of 27 public companies that are major players in the solar industry. This included companies with a business model primarily focused on solar power or ones that dealt with solar-related products or services.
Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.
Cory has been a professional trader since 2005, and holds a Chartered Market Technician (CMT) designation. He has been widely published, writing for Technical Analysis of Stock & Commodities magazine, Investopedia, Benzinga, and others. He runs TradeThatSwing.com, has authored several trading courses and books, coaches individual clients, and regularly trades stocks, currencies, and ETFs.
The shift to sustainable energy to protect the environment has caused the solar power market to grow worldwide. According to SolarPower Europe, the worldwide solar market will double to 2.3 TW in 2025 compared to a global 1 TW capacity in 2022. The exponential growth of the solar energy industry has come about owing to multiple positive triggers, including cost reductions, enhanced affordability, government incentives, improved solar panel durability, concerns surrounding climate change, and subsequent growth in demand.
The US solar power industry is expected to grow by 27.3% in 2022 and is estimated to be valued at $16.9 billion as of 2022. The United States boasts 617 businesses in the industry with an employee base of 5,525 individuals. The global solar power market is projected to grow at a CAGR of 6.9% over the period 2021-2028, growing from $184.03 billion in 2021 to $293.18 billion in 2028. Some of the key players in the industry include First Solar, Inc. (NASDAQ:FSLR), Sunrun Inc. (NASDAQ:RUN) and Enphase Energy, Inc. (NASDAQ:ENPH).
Global X Solar ETF (RAYS) is an ETF tracking the Solactive Solar Index. The ETF is designed to invest in companies that are well-positioned to reap the benefits of the rise in the adoption of solar technology. The companies included in the ETF are involved in the solar power production, development, and manufacturing of solar-powered batteries/generators, etc.
We started with the holdings of Global X Solar ETF (RAYS) and ranked its holdings using Insider Monkey's proprietary hedge fund sentiment data which tracks the holdings of over 900 elite hedge funds. So, the stocks we have included in our list are the best solar energy stocks to buy according to hedge funds.
Headquartered in Shanghai, Daqo New Energy Corp. (NYSE: DQ) is a global leader in the production of high-purity polysilicon for the solar PV sector. The company produces and sells high-purity polysilicon to photovoltaic product manufacturers, who then process the polysilicon into cells, ingots, and modules for solar power solutions.
In addition to Daqo New Energy Corp. (NYSE:DQ), First Solar, Inc. (NASDAQ:FSLR), Sunrun Inc. (NASDAQ:RUN), and Enphase Energy, Inc. (NASDAQ:ENPH) are included in our list of 12 best solar energy stocks to invest in heading into 2023.
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is a leading provider of EBOS solutions and components for solar energy projects. The company sells EV Charging solutions in the United States for public and fleet electric car charging stations. Shoals Technologies Group, Inc. (NASDAQ:SHLS) primarily sells to engineering, procurement, and construction organizations that develop solar energy projects and install electric car charging stations.
Shoals Technologies Group, Inc. (NASDAQ:SHLS) manufactures electrical balance of systems (EBOS) components for ground-mounted solar projects and has been gaining market share for quality of service and price. Shoals is also starting to develop an EV charging infrastructure business. We previously owned Shoals and sold our position earlier this year as supply chain issues were negatively affecting margins. Improving supply chain dynamics should support the stock, and tax credits for clean energy production and investment in the IRA should further act as a tailwind for Shoals.
Canadian Solar Inc. (NASDAQ:CSIQ) is one of Canada's world's largest solar technology and renewable energy firms. The company is a major solar photovoltaic module producer and a manufacturer of battery storage projects with a diverse geographical pipeline at various stages of development.
Sunnova Energy International Inc. (NYSE:NOVA) provides home solar and energy storage services. The company delivers energy resilience and dependability to solar plus energy storage consumers through energy storage technology. Services provided by the company include operations and maintenance, monitoring, repairs and replacements, equipment upgrades, and onsite power optimization. Sunnova Energy International Inc. (NYSE:NOVA) has roughly 195,000 subscribers in over 25 states and territories.
SunPower Corporation (NASDAQ:SPWR) is a leading provider of solar technology and energy services that provides fully integrated solar, storage, and home energy solutions to consumers, mainly in the United States and Canada, through a variety of hardware, software and financing options, as well as Smart Energy solutions.
On December 6, 2022, Michael Blum, an analyst at Wells Fargo, started covering Array Technologies, Inc. (NASDAQ:ARRY) with a price target of $28 and an Overweight rating on the stock. According to the analyst, policy support, the low cost of solar, and state and federal utility regulations to decarbonize and attain net zero emission will be the driving factor for the company to grow revenues at a CAGR of 10%.
The time may be right again for buying solar energy stocks, or at least adding them to your watch list. Equities in the industry had become overvalued, experts say, leaving them primed for their current downturn, which was fueled by the shift from growth stocks as interest rates rise, burgeoning input costs amid broader inflation and supply chain constraints that have made solar installations more expensive. Additionally, there were increasing worries that the solar-supportive Build Back Better bill wouldn't pass and uneasiness about potential solar industry rule changes in California. Amid the angst, these seven solar stocks are all worth a good deal less than they were a year ago, perhaps making them ripe for bargain hunting given the bright future ahead for the expanding solar industry.
Raw material cost inflation includes higher prices for aluminum, semiconductors and polysilicon, which is used to make the most common type of solar panels. But for First Solar, the polysilicon shortage is a competitive advantage. The solar cells it makes use cadmium-telluride technology, allowing it to skirt at least one major supply chain bottleneck. Not being reliant on polysilicon also means First Solar isn't reliant on Xinjiang, a region in China where the U.S. says Muslim minorities are forced to work in the industry against their will. Much of the world's polysilicon comes from Xinjiang. First Solar's technology also means its manufacturing process has a smaller carbon footprint than those making panels from polysilicon. \"As a result, we would expect First Solar to increase global market share of solar panels and in some regions command a price premium to more conventional crystalline silicon competitors,\" says Max Slee, portfolio manager with Ecofin.
California has been debating a controversial plan to change the way rooftop solar users are compensated when they provide extra power to the grid in what is known as net metering. That has weighed on Sunrun stock, which provides solar panels and batteries for purchase or lease. But the proposed changes in California have been put on hold, potentially giving shares some breathing room. \"The drop has been overblown,\" says Peter Krull, CEO at Earth Equity Advisors. \"With the indefinite delay in the changes, this is a great opportunity to buy in.\"
There is need in the market for financing solar installations that most banks aren't meeting, Krull says. That should be an opportunity for Sunlight Financial, which should be considered one of the best solar stocks due to its industry role, but the company's shares have fallen sharply since it started trading publicly last year. With such little public market experience under its belt, the company could be risky. But the reward could be big if demand for home solar systems continues to expand. By 2028, U.S. residential solar photovoltaic sales could top $14 billion, up from $9.1 billion in 2020, according to Grand View Research. Although the Build Back Better agenda has stalled, portions of the plan that include support for the solar industry could still pass, likely benefiting companies like Sunlight Financial.
Amid growth in the solar industry, there is a trend toward more systems that combine solar panels with battery storage. One solar components company that has been wading into the battery market is SolarEdge Technologies. \"Attractive global rooftop s