Solar stocks are catching a boost on the heels of the Senate’s approval of the Inflation Reduction Act, a $430 billion climate bill aimed to reduce the budget deficit via tax reform while investing in renewable energy that is expected to be passed by the House this week.
The solar industry has had a bumpy 2022 as supply chain disruptions, rising production costs, and labor shortages have hampered the sector, but there’s no denying its long-term exponential growth. Over the last decade, solar energy has witnessed an average annual growth rate of 49%. This phenomenal growth is due partly to strong federal policies like the Solar Investment Tax Credit, which currently provides a 26% tax credit on solar investments.
Another factor that is fueling growth in the industry is declining prices for solar components and installation. The cost of solar has plunged 90% over the past decade, along with falling equipment and infrastructure prices. An average-sized residential system has dropped from a price of $40,000 in 2010 to roughly $20,000 today.
The growth in solar is hardly restricted to the residential sector. Solar power has helped many Fortune 500 companies cut back on costs. Apple, Amazon, Target, and Walmart have all invested heavily in solar production at various locations around the country. Apple is leading the way with more than 390 MWs of commercial capacity, and Amazon is a close second with 329 MWs.
Solar power isn’t going anywhere anytime soon, so continued growth can be expected in the long term. Business Insights projects that the $163 billion global solar industry will reach $194.75 billion by 2027, exhibiting a CAGR of 6%. This article will compare some of the top solar investments available.
The Invesco Solar ETF (TAN) is still down 30% from its February 2021 high but has gained more than 10% in the past month, and the industry seems primed to build on this strong momentum.
The Invesco Solar ETFis a great way to gain exposure to solar without investing in just one stock. The fund seeks to track the MAC Global Solar Energy Index and is comprised of about 35 individual components — including both U.S. and international stocks. The fund follows a blended strategy, investing in value and growth stocks with various market caps.
TAN’s share price peaked in mid-February 2021 and has fallen since. However, it could be an excellent opportunity to get in at a more attractive price as growth in the solar industry will likely gain strength in the long term.
ETFs, by their nature, are often considered a less risky investment as they tend to be much less volatile than individual stocks. If you’re unsure about which solar stocks to buy and want to cut back on potential risk, TAN is a relatively safe way to add solar energy to your investment portfolio.
Invesco Solar ETF (TAN)
- Weighted Average Market Cap $8.10B
- Price / Earnings Ratio 44.39
- Price / Book Ratio 2.32
- YTD Return 8%
- Yield 0.10%
- Expense Ratio 0.66%
- Net Assets 2.31B
- Number of Holdings 147
- Top Holdings Enphase Energy, SolarEdge Technologies, Sunrun
Of course, compared to other solar investments, a less risky ETF investment probably won’t provide exponential returns in the near term. For investors with a higher tolerance for volatility, investing in an individual company is likely the more desirable choice. But due to high levels of competition in the space, not all solar companies are guaranteed to sustain. It’s essential to be selective when evaluating solar stocks and choose companies with a proven reputation and a strong balance sheet. In the next section, we’ll cover two of the top solar stock choices available.
Arguably one of the best-positioned names to benefit from the new act, First Solar Inc. (FSLR) is a leader in the solar industry. Unlike many burgeoning solar companies, they have a rock-solid balance sheet that can handle the challenges of an economic downturn.
One of the most popular solar stocks to buy, First Solar, provides solar panels and photovoltaic powerplants. What sets the company apart from the competition is its ultra-thin semiconductor technology, which provides enhanced resilience and efficiency for its modules.
There is plenty of upside in the sector and room for growth. Overall, solar energy only accounts for around 2% of the total grid usage. First Solar is preparing for growing demand as that number is primed to increase.
FSLR was the beneficiary of multiple upgrades this week, including one from JPMorgan’s Mark Storuce, who upgraded the stock from Neutral to Overweight. “FSLR has nearly 3 GW of US-based module capacity, expanding to 5.9 GW by year’s end 2024 that will qualify for the domestic manufacturing tax credit,” he wrote, adding that the value of the credits could add $931 million to the company’s 2024 net income.
Founded in 2001, Canadian Solar Inc. (CSIQ) is a leading manufacturer of solar photovoltaic modules and a provider of solar energy solutions. CSIQ has delivered around 52 GW of solar modules to thousands of customers in more than 150 countries through the end of 2021, reaching approximately 13 million households. Canadian Solar derives roughly 47% of its revenue from Asia, 35% from the Americas, and 18% from Europe and everywhere else.
Canadian Solar is one of the most bankable companies in the solar and renewable energy industry, having been publicly listed on the NASDAQ since 2006. The company has the potential to advance in the upcoming months based on its continued business growth, favorable earnings, and revenue outlook.
Benefitting partially from renewed interest in renewable energy solutions, Canadian Solar posted revenue of $1.25 billion in Q1 of this year, up nearly 15% from the $1.09 billion in sales posted in the year-ago quarter. CSIQ is up 33% year to date, while the Nasdaq index is down 19% during the same period, making Canadian Solar intriguing on a relative level. Moreover, the share price remains 33% below its February 2021 peak, and now may be a good time to buy before the next leg up.
Read Next: America is going mad—is this next?
America is definitely going a little mad…
Some states are threatening to break away. The rich are fleeing. The wealth gap is soaring.
According to a recent article in the New York Times, people are driving more recklessly than ever… and drinking more alcohol than ever too.
And that’s just the beginning…
Altercations on airplanes are now at all-time highs. So are murder rates. And violent crime is soaring across the board. Students are more disruptive than ever. Hate crimes have hit a 12-year high, according to the FBI.
The question of course is:
Where is this all headed… and what’s coming next?
Well, one of the wealthiest and most successful entrepreneurs in America has a very clear answer you’re unlikely to hear anywhere else…
Bill Bonner is a 73-year-old son of a tobacco farmer, who now owns six large properties in South America, Central America, and the U.S… plus three in Europe.
Bonner is also one of the most humble and thoughtful men in the world today. He’s the author of three New York Times bestsellers… and has built several homes with his own hands, using ancient building techniques.
I’m telling you about Bonner today because has just come forward with an important message…
What he calls: His 4th and Final Warning.
It’s worth paying attention to, because Bonner has made 3 other big macro-economic predictions in his career… and each one proved to be exactly right.
Today, Bonner says we are headed towards a very difficult period in the U.S.… one of our most difficult times ever… which will result in something he calls: “America’s Nightmare Winter.”
What does that mean, exactly—and how could it affect you and your money?
Bonner doesn’t claim to have all the answers–but he recently went public with the fascinating analysis, recorded at his 60-acre property overlooking one of Europe’s most beautiful rivers.
He says:
“I believe it falls on someone like me to warn people… clearly… and without distraction.
“I can do this now because I’m too rich to care about money… and too old to care about what anyone says about me.”
And in this analysis, Bonner explains exactly how he believes this difficult period will play out, and even more important: The 4 Steps every American should take right now to prepare.
Get the facts.
Learn how to protect yourself and get a peek inside Bonner’s spectacular European property.
We’ve posted Bonner’s full analysis and his 4 recommended steps on our website.
You can view it free of charge here…
Sincerely,
Mike Palmer
Founding Partner, Stansberry Research
P.S. Is Bonner right? I can’t say for sure… but Stephen Schwarzman, the CEO of Blackstone (America’s biggest private equity firm), recently went public on CNN with almost the exact same warning.
Get the full story here before it appears anywhere else, and learn what you can do to protect and even grow your money during this difficult time. Click here to view
