The solar stocks looking to shine bright in 2021
With the solar industry continuing to rise in popularity, Maxim Manturov, Head of Investment Research at Freedom Finance Europe, advises on the top stocks to watch this year.
“The last decade has witnessed a monumental shift towards solar power and renewable energy, as the global economy moves away from fossil fuels such as oil and natural gas to help reduce carbon emissions. The popularity of such stocks therefore comes as no surprise as investors increasingly look towards companies that are making a positive socio-economic impact, and will only continue to grow as younger, more conscientious investors enter the stock market and look to change the world one investment at a time.
“Alongside this, seeing as it will take a significant amount of time and money to complete this transition to an eco-friendlier world, solar energy is clearly a compelling investment for those looking to benefit in the long term. For traders looking to combine investment with social responsibility, and make a real difference while gaining a profit, solar stocks and impact investing are the clear way to go,” explains Maxim Manturov, Head of Investment Research at Freedom Finance Europe.
With this in mind, Maxim shares insight on the best value solar stocks to watch in 2021, as well as the fastest growing stocks and those gaining the most momentum:
The best value solar stocks
- SunPower Corp. (SPWR) is currently one of the largest US solar energy companies. Over the last two years, SPWR’s business model became much simpler, resulting in a significant increase in profit. In fact, in Q1 2021, SunPower’s earnings soared by nearly 16%. Despite slowdown due to the pandemic, the company also posted profits in 2020, continuing the trend from the previous year. The target price is currently sitting at $34, and the projected yield is 22.70%, with a P/E ratio of 9.90.
- First Solar Inc. (FSLR) designs and manufactures solar power systems and modules. The company uses thin film semiconductor technology to manufacture such modules. The US banned imports of certain solar panel products from China, reducing competition for the company. First Solar posted solid results in Q1 2021, with net profits increasing by 131.20%, while earnings rose by 51%. The target price is currently sitting at $110, and the projected yield is 30.20%, with a P/E ratio of 17.40.
The fastest growing solar stocks
- Sunrun Inc. (RUN) is a leading residential solar energy company operating in the US. In Q1 2021, Sunrun’s earnings increased by 59% YoY to $334,800,000. Alongside this, numerous positive factors such as growing consumer interest in cutting carbon emissions, lower solar panel costs, and government support, could help the company increase its profits over the next few years. The average target price is currently sitting at $75.70, which offers a 43.40% upside potential.
- Enphase Energy Inc. (ENPH) designs, develops, manufactures, and markets solar energy storage systems based on micro inverters. In addition to this, Enphase’s smart platform facilitates energy management and provides convenient solutions. Last quarter, the company’s earnings grew by about 47% YoY. And with multiple promising projects in development, ENPH should continue to expand its target market going forward. The average target price is at $197, which means a 15.70% upside potential.
The solar stocks with the most momentum
- Sunnova (NOVA) is a residential solar power company, meaning it mainly offers solar roofs and battery storage. As Biden aims to double the number of solar panels installed in the US, this should provide Sunnova with an additional boost. The stock has been up trending since mid-May, and maintains fundamental potential towards the average target price of $54.20 and an upside of 53.50%.
- SolarEdge Technologies, Inc. (SEDG) and its subsidiaries design, develop, and market optimised DC inverter systems for solar photovoltaic (PV) installations worldwide. The main reason for optimism around the company’s stock is its potential earnings growth in the coming years.
SolarEdge positions itself as a leading solar inverter company with presence in 28 countries. It offers a full range of solar panels for residential and commercial facilities. SolarEdge expects commercial and utility segments to be key growth drivers. The company’s stock has been rising heavily since May after hitting the bottom, with a 34% increase, and is likely to keep this momentum given the potential average target price of $315 and an upside of 17.80%.