In this piece, we will take a look at the 11 best solar stocks to buy now.
High energy prices and global warming have shifted the focus of governments all over the globe towards sustainable energy. On this front, the largest and most developed economies in the world have started to provide incentives to both customers and companies to acquire and develop alternative energy products that are environmentally friendly.
One such category of products is solar panels, which provide users with the ability to harness the energy of the Sun and use it as electricity. Industry outlooks for this segment are bright, especially at a time when the world was once again reminded of its dependence on crude oil when prices skyrocketed in the aftermath of the Russian invasion of Ukraine.
This market is one of the most valuable ones that you will come across, and nearly every research report that we have analyzed estimates that the value of this segment will be worth hundreds of billions of dollars. Starting from Fortune Business Insights, the research firm estimated that the solar market was worth $170 billion in 2020 and that it will grow at a compounded annual growth rate of 6.9% to reach $293 billion as 2028 ends.
Another report from Allied Markets Research, which narrows down the solar market to focus on photovoltaic and solar power systems estimates that these segments were worth $52 billion in 2018 and will grow at a strong 20.5% CAGR to sit at $223 billion by 2025 end. Fortune Business Insights also narrows its focus down on the global photovoltaic market and in a report that was released in April 2022, the research firm has astounding estimates for this industry.
In its report, the firm outlines that this particular market had a value of $154 billion in 2020 and that it will grow at a 25.9% CAGR to be worth a staggering $1 trillion as 2028 ends. The research firm ascribes this growth to the strong demand for electricity and the rising use of fossil fuels – both of which will nudge customers to try out other technologies to diversify their energy sources. It adds that Asia Pacific will account for the bulk of this estimated impressive growth.
Therefore, it appears to be a no brainer that the solar industry merits a serious look for investment. Some of the top firms in today’s piece that are likely to cross your attention are Sunrun Inc. (NASDAQ:RUN), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and Tesla, Inc. (NASDAQ:TSLA).
Photo by Science in HD on Unsplash
Our Methodology
In order to pick out the top solar stocks for you, we scanned through the countless firms that are operating in the industry and selected the relevant ones by studying their balance sheets and market performance. The companies were then ranked according to Insider Monkey’s survey of 895 hedge funds for the second quarter of this year.
Best Solar Stocks to Buy Now
11. Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN)
Number of Hedge Fund Holders: 10
Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) is a Singaporean company that designs, manufactures, and sells solar panels and associated components. It serves both residential and commercial customers and offers its products both directly and through dealers.
Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN)’s solar panels are among the best in the market, as they have a high conversion efficiency ratio of 25.2% which allows them to produce 360 Watts per panel as opposed to the 270 Watts that are produced by its competitors’ products. Its panels are also more durable and face less corrosion due to the use of aluminum over copper. Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN)’s products will also receive a 30% tax credit in the U.S. owing to recent legislation and the company has exclusive contracts with a company to provide products in both America and Canada.
Morgan Stanley increased Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN)’s share price target to $21 from $14 in August 2022 as it outlined that the Inflation Reduction Act will grow the company’s market. Insider Monkey’s Q2 2022 survey of 895 hedge funds listed 10 as having invested in the company.
Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN)’s largest investor is Robert Henry Lynch’s Aristeia Capital which owns 198,352 shares that are worth $2.6 million.
Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) joins SolarEdge Technologies, Inc. (NASDAQ:SEDG), Sunrun Inc. (NASDAQ:RUN), and Tesla, Inc. (NASDAQ:TSLA) in the list of some of the top solar stocks that you’ll come across.
10. Canadian Solar Inc. (NASDAQ:CSIQ)
Number of Hedge Fund Holders: 13
Canadian Solar Inc. (NASDAQ:CSIQ) is a solar energy company that sells a wide variety of products such as solar wafers, solar ingots, solar cells, and battery storage solutions in Asia, America, Europe, and other countries. In addition to the products, the company also provides electricity and maintenance services for solar generation equipment. It is headquartered in Guelph, Canada.
Canadian Solar Inc. (NASDAQ:CSIQ) has posted strong earnings growth over the last five years, as its earnings have grown by more than 28%, lending strong confidence in its products and ability to execute. Coupled with a price to sales (P/S) estimate of 0.3x, this suggests that there is a lot more growth left in this stock – which is further bolstered by the fact that its management expects sales to grow by another lofty 35% this year.
JPMorgan raised Canadian Solar Inc. (NASDAQ:CSIQ)’s share price target to $42 from $38 in August 2022 as it stated that despite stellar growth, the solar industry is set for even higher highs. Insider Monkey scanned 895 hedge fund portfolios for this year’s second quarter and discovered that 13 had bought the company’s shares.
Out of these, D. E. Shaw’s D E Shaw is Canadian Solar Inc. (NASDAQ:CSIQ)’s largest investor. It has a $13.5 million stake that comes through 435,674 shares.
9. JinkoSolar Holding Co., Ltd. (NYSE:JKS)
Number of Hedge Fund Holders: 16
JinkoSolar Holding Co., Ltd. (NYSE:JKS) is a Chinese company that designs, produces, and sells photovoltaic and other products such as silicon wafers, silicon ingots, solar modules, and solar sells. The company has more than 100 Gigawatts of capacity and it sells its products all over the globe including the U.S, Mexico, Japan, and U.A.E.
JinkoSolar Holding Co., Ltd. (NYSE:JKS) is another company whose products have a high conversion efficiency. Latest estimates peg this value at 25.7%, making it among the highest in the industry. Due to its large scale operations, the firm also commands 15% of the global solar market share and is also the first company to have delivered 100 GW of modules globally. Finally, in a key consideration, JinkoSolar Holding Co., Ltd. (NYSE:JKS)’s share are valued 4x in China when compared to their ADRs, indicating that perhaps there’s more to the stock price that meets the eye.
As this year’s June quarter came to an end, 16 out of the 895 hedge funds polled by Insider Monkey had invested in JinkoSolar Holding Co., Ltd. (NYSE:JKS).
JinkoSolar Holding Co., Ltd. (NYSE:JKS)’s largest investor is Lei Zhang’s Hillhouse Capital Management which owns 1.1 million shares that are worth $78 million.
8. Brookfield Renewable Partners L.P. (NYSE:BEP)
Number of Hedge Fund Holders: 19
Brookfield Renewable Partners L.P. (NYSE:BEP) is an electricity generation company that uses renewable energy sources such as wind, hydroelectric, biomass, and solar. The firm has tens of thousands of megawatts of power generation capacity, and it is headquartered in Hamilton, Bermuda.
Brookfield Renewable Partners L.P. (NYSE:BEP) is one of the largest renewable power generation companies in the world, as it has $70 billion of assets and 21GW of capacity. As a testament to the strength of its operations, the company’s shares have delivered a 17% annual total return since being listed, and by the end of this year, Brookfield Renewable Partners L.P. (NYSE:BEP) will have returned 15% according to management estimates. To further sweeten the deal, the company also pays a $1.28 dividend for a 3% annual yield.
Desjardins raised Brookfield Renewable Partners L.P. (NYSE:BEP)’s share price target to CAD50 from CAD49 in August 2022. Insider Monkey studied 895 hedge fund portfolios for this year’s second quarter to discover that 19 had held stakes in the company.
Brookfield Renewable Partners L.P. (NYSE:BEP)’s largest investor is Robert Joseph Caruso’s Select Equity Group through an $89 million stake that comes via 2.5 million shares.
ClearBridge Investments mentioned the company in its Q1 2022 investor letter. Here is what the fund said:
“Brookfield Renewable is a pure-play renewables operator and developer headquartered in Canada, focused on international hydro, solar, wind and storage technology. As more private and public institutions announce ambitious carbon reduction initiatives, Brookfield Renewable’s globally diversified, multi- technology renewables business makes it an attractive partner. Brookfield’s development pipeline stands at 18,000 MWs, providing confidence the company can meet its targeted double- digit cash flow growth through to 2025. The market narrative around the energy transition and energy security, along with increasing fossil fuels prices which have driven greater focus on switching to renewables, helped Brookfield shares in the quarter.”
7. SunPower Corporation (NASDAQ:SPWR)
Number of Hedge Fund Holders: 21
SunPower Corporation (NASDAQ:SPWR) is an American company that provides solar energy products and services to home builders, government entities, residential customers, financial institutions, independent power producers, and electric utilities. The company provides solar, storage, and home energy solutions.
SunPower Corporation (NASDAQ:SPWR)’s latest quarter saw it report a whopping 60% rise in quarterly sales as it also added a record number of customers.
Morgan Stanley raised SunPower Corporation (NASDAQ:SPWR)’s share price target to $31 from $22 in August 2022, citing confidence in the company’s future in the wake of the Inflation Reduction Act. 21 out of the 895 hedge funds polled by Insider Monkey for this year’s first quarter had invested in the company.
D. E. Shaw’s D E Shaw is SunPower Corporation (NASDAQ:SPWR)’s largest investor. It owns 2.5 million shares that are worth $39 million.
6. Shoals Technologies Group, Inc. (NASDAQ:SHLS)
Number of Hedge Fund Holders: 23
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is an electrical systems provider for solar energy products that is headquartered in Portland, Tennessee, United States. The company provides several components such as cable assemblies, fuses, connectors, and wireless monitoring systems.
One key factor about Shoals Technologies Group, Inc. (NASDAQ:SHLS) is the fact that its performance is not directly tied to the solar industry. This is due to the fact that the company’s main market is existing solar power generation facilities, which it targets to get them to use its equipment instead of its rivals’. These components transfer the current from a solar panel to an inverter, and in 2021, half of the new solar systems installed in the U.S. had used Shoals Technologies Group, Inc. (NASDAQ:SHLS)’s products. Additionally, since Shoals Technologies Group, Inc. (NASDAQ:SHLS)’s products do not require a licensed electrician for installation, they attract customers by promising 43% and 23% installation and materials cost savings.
Roth Capital increased Shoals Technologies Group, Inc. (NASDAQ:SHLS)’s share price target to $40 from $20 in August 2022, sharing that its Q2 results were impressive. Insider Monkey’s 895 hedge fund poll for Q2 2022 saw 23 as having invested in the company.
Out of these, Shoals Technologies Group, Inc. (NASDAQ:SHLS)’s largest investor is Todd J. Kantor’s Encompass Capital Advisors which has a $52 million stake that comes through 3 million shares.
Sunrun Inc. (NASDAQ:RUN), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and Tesla, Inc. (NASDAQ:TSLA) are joined by Shoals Technologies Group, Inc. (NASDAQ:SHLS) in our list of hot solar stocks.
5. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 26
First Solar, Inc. (NASDAQ:FSLR) is an American photovoltaic solar product provider that is headquartered in Tempe, Arizona. The company provides solar modules that convert solar energy into electricity and it sells its products to both residential and commercial customers.
First Solar, Inc. (NASDAQ:FSLR) is one of the largest beneficiaries of the Inflation Reduction Act that was passed in the United States Senate earlier this month. The bill will provide $40 billion in assistance to solar manufacturers, and First Solar, Inc. (NASDAQ:FSLR) already has a manufacturing footprint in the U.S. and plans to increase it because of the new legislation. First Solar, Inc. (NASDAQ:FSLR) is also on a strong bookings track this year, as its 44 GW of expected shipments in the first half is twice what it shipped in 2021. Additionally, most of its products have already been booked until 2024, indicating that there is a strong demand that is unlikely to die down. Additionally, the company is expected to grow its sales by 26% and 28% in 2023 and 2024, respectively.
Piper Sandler increased First Solar, Inc. (NASDAQ:FSLR)’s share price target to $165 from $120 in August 2022 as it shared that the firm had a strong Q2 and manufacturing tax credits will drive its sales. 26 of the 895 hedge funds part of Insider Monkey’s Q2 2022 survey had held a stake in the company.
First Solar, Inc. (NASDAQ:FSLR)’s largest investor is D. E. Shaw’s D E Shaw which owns 881,545 shares that are worth $68 million.
4. Array Technologies, Inc. (NASDAQ:ARRY)
Number of Hedge Fund Holders: 26
Array Technologies, Inc. (NASDAQ:ARRY) is an American company that provides a solar tracking system based on machine learning software that identifies optimal positions for a solar array to generate electricity. The company is headquartered in Albuquerque, New Mexico.
Array Technologies, Inc. (NASDAQ:ARRY) is a key supplier to the electric utility industry, and since California has mandated that all utilities have to be 100% carbon free by 2045, the company will continue to see strong demand for its products. Its trackers improve electricity output by 25%, and the tracker industry itself is expected to stand at $21 billion by 2028 – ensuring a strong market for its products. Following an acquisition earlier this year, Array Technologies, Inc. (NASDAQ:ARRY) is also the largest solar tracking company in the world.
Truist raised Array Technologies, Inc. (NASDAQ:ARRY)’s share price target to $23 from $13 in August 2022, outlining that while its recent quarterly performance was impressive, there is still some uncertainty about margins. Insider Monkey profiled 895 hedge funds for this year’s first quarter and discovered that 26 had held a stake in the company.
Out of these, Jos Shaver’s Electron Capital Partners is Array Technologies, Inc. (NASDAQ:ARRY)’s largest investor. It has a $59 million stake that comes through 5.3 million shares.
3. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 36
Sunrun Inc. (NASDAQ:RUN) is an American residential solar energy systems provider. It provides products such as panels, racks, solar leads, and battery storage. The firm is headquartered in San Francisco, California.
A risk reward tradeoff matrix analysis of Sunrun Inc. (NASDAQ:RUN)’s shares with its peers and the S&P 500 index reveals that the company is the least risky except for the S&P and has some of the highest potential upside. The company’s latest quarterly report saw it grow its revenues by a whopping 48% annually, and analyst projections estimate it to grow its revenue at an average of 13% over the course of the next four years. To further improve matters, this growth is still below the industry CAGR estimates of 25.7% for 2028.
Morgan Stanley increased Sunrun Inc. (NASDAQ:RUN)’s share price target to $79 from $70 in August 2022, highlighting that the Inflation Reduction Act will boost the company’s fortunes. As the second quarter of this year ended, 36 of the 895 hedge funds surveyed by Insider Monkey had held the company’s shares.
Sunrun Inc. (NASDAQ:RUN)’s largest investor is William B. Gray’s Orbis Investment Management which owns 12 million shares that are worth $303 million.
2. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 40
SolarEdge Technologies, Inc. (NASDAQ:SEDG) designs and sells DC inverter systems for solar power installations. The company has its customers located all over the globe and some of its products include inverters, power optimization systems, communications systems, and a cloud based monitoring platform. It is headquartered in Herzliya, Israel.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) has consistently grown its revenues over the last ten years, with a growth rate higher than 30% for eight of the ten years (including the most recent ones). Additionally, and for some eye popping figures, the company has its eye on the global expansion of the solar market, and by 2021 end it had grown its megawatts shipped outside Europe and North America by a whopping 511% over 2017. SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s earnings per share are slated to grow by an average of 29% according to analysts, indicating that the best is yet to come.
JPMorgan raised SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s share price target to $419 from $373 in August 2022. Insider Monkey’s June 2022 survey of 895 hedge funds outlined that 40 had held a stake in the company.
Ian Simm’s Impax Asset Management is SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s largest investor. It owns 80,909 shares that are worth $158 million.
ClearBridge Investments mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“We are well-positioned to participate in the accelerating energy transition. High and rising utility costs combined with policy support are driving increased penetration of home solar plus storage systems in Europe. Israel-based SolarEdge Technologies (NASDAQ:SEDG) expects to see significant growth in solar installations in this market led by Germany and Italy, among others, where consumers are not only demanding solar on the roof but a complete system solution including batteries. This phenomenon is accelerating revenue growth for these companies.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is one of the largest renewable energy companies in the world. While the firm is primarily known for its cars, it also sells solar energy generation and storage products to commercial, residential, and industrial users.
Tesla, Inc. (NASDAQ:TSLA) is one of the leaders in the battery energy storage space, as the company has a myriad of software products that cater to its customer needs. These include options such as Autobidder, Powerhub, and Microgrid Controller, which target users such as utilities and homeowners, Tesla, Inc. (NASDAQ:TSLA)’s second quarter was also the first time that the company posted a gross profit from its energy generation and storage segment through a massive 41% annual growth.
Canaccord raised Tesla, Inc. (NASDAQ:TSLA)’s share price target to $881 from $815 in August 2022, as it stated that the company’s solar and energy offerings will ensure that it remains a “sustainability behemoth”. For their June quarter of 2022 holdings, 72 out of the 895 hedge funds part of Insider Monkey’s research had invested in the company.
Out of these, Catherine D. Wood’s ARK Investment Management is Tesla, Inc. (NASDAQ:TSLA)’s largest investor. It owns 1 million shares that are worth $1 billion.
Baron Funds mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
- First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;
- second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful.
Regardless, I was right to have spoken with Roger. That was since he outlined numerous issues we needed to consider, study, and question before we determined whether we believed Tesla could be a successful business…before we ultimately chose whether to invest in that company.
When we completed our initial due diligence on Tesla, which diligence has been ongoing since 2014, we decided to invest $360 million in Tesla over the next two years. I then called Roger and outlined why I thought we could earn 20 times our capital over the next 10 years. Roger was so certain I was wrong that he offered to bet me $1 million that Tesla would fail. “Roger, I can’t bet you a million dollars. First, if you are right, I couldn’t afford to pay you. Second, if I’m right, you’re my friend, and I couldn’t take your money.” We settled on a dinner bet…” (Click here to see the full text)
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Disclosure. None. 11 Best Solar Stocks to Buy Now is originally published on Insider Monkey.
