In this article, we will be looking at the 12 best solar energy stocks to invest in. To skip our detailed analysis of the renewable energy sector and its future outlook, you can click to see the 5 Best Solar Energy Stocks to Invest In.
According to the Office of Energy Efficiency and Renewable Energy, the sunlight hitting the surface of the earth in one and a half hours can easily take care of the world’s energy consumption for an entire year. Such a claim makes one wonder why the global community hasn’t already switched entirely to solar to meet all their energy needs, seeing as it is an inexhaustible energy source that will stick around till the end of time. It’s no wonder, then, that the solar industry is steadily becoming one of the most coveted in the world.
One of the major reasons why solar is still not used freely across the globe may be the rising costs of the energy source in recent times. According to Bloomberg, while solar’s major selling point was once its low cost, 2021 has reversed that situation. Solar module prices have reportedly increased by 18% starting 2021, a shocking development when compared to the 90% drop in prices over the last ten year. The main culprit behind these rising costs is the quadrupled cost of polysilicon, which is the main material used in solar modules. As such, demand for solar panels and the progress of large-scale projects are both being disrupted. Mint has reported that about 10 GW’s worth of projects could be affected by these price increases in India, while Cowen & Co. analysts have made similar comments regarding large-scale solar projects in the US.
Despite this, renewable energy and solar power, in particular, are still considered lucrative investment options and are expected to grow in terms of their contribution to the global economy in the coming years. A report cited by Bloomberg on June 11th bears witness to this claim and has stated that over $2.7 trillion has been invested in the renewables sector in the past 10 years. During the same time frame, renewables such as solar and wind have doubled their share in the “global power mix,” rising from about 5.9% in 2009 to approximately 13.4% in 2020. Its contribution is also significant in terms of employing the global community. According to the Solar Energy Industries Association (SEIA), the solar industry is highly successful in the US and employed over 230,000 Americans in 2020 at more than 10,000 companies in all US states.
Perhaps the only thing missing that would ensure the essentiality of solar energy being recognized by the global community was the COVID-19 pandemic. According to the Wall Street Journal, the pandemic brought with it employment uncertainty, hefty electricity bills, increasing power outages, and low-interest rates, all of which served to give the solar industry one last push. While during the start of the pandemic, residential solar installments had dropped by 23% sequentially because of the difficulty of making sales through door-to-door marketing, this development forced major solar providers to shift their sales models to a digital interface. The ease of making installment orders online alongside rising electricity costs in the US during the pandemic – with a 9.8% increase year over year as reported in June last year – worked together to push the average American citizen to get solar installed in their house. Major solar-providing companies saw increasing web traffic because of the higher demand for residential solar installations last year. Sunnova Energy International Inc. (NYSE: NOVA) saw a 48% increase in their web traffic, for instance. Stocks like Tesla, Inc. (NASDAQ: TSLA) and Brookfield Renewable Corporation (NYSE: BEPC) are also becoming better investment options as the global community shifts towards renewable energy. Yes, for the purposes of this article we consider Tesla Inc (TSLA) a solar energy stock even though it generates most of its revenue from electric vehicle sales. At the end of this article you will find out whether Tesla is a good investment right now.
In light of the above, we have compiled a list of the best solar energy stocks to invest in based on hedge fund popularity fundamentals, analysts’ ratings, and future growth potential based on core business strengths.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 28th, 2021, our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, let’s now look at the 12 best solar energy stocks to invest in.
12. GCL-Poly Energy Holdings Limited (OTCMKTS: GCPEF)
Number of Hedge Fund Holders: N/A
GCL-Poly Energy Holdings Limited (OTCMKTS: GCPEF) is a solar photovoltaic company operating in China and internationally. It has three segments: Solar Material Business, Solar Farm Business, and New Energy Business. The company ranks 12th on our list of the best solar energy stocks to invest in.
GCL-Poly Energy Holdings Limited (OTCMKTS: GCPEF) has a gross profit margin of 25.16% and a $6.39 billion market cap. The company’s 12-month trailing total return was valued at 529.4% as of this month. It owns various large-scale solar farms across the globe.
Like Sunnova Energy International Inc. (NYSE: NOVA), Tesla, Inc. (NASDAQ: TSLA), NextEra Energy, Inc. (NYSE: NEE), and Brookfield Renewable Corporation (NYSE: BEPC), this is a good stock to invest in.
11. ReneSola Ltd (NYSE: SOL)
Number of Hedge Fund Holders: 3
ReneSola Ltd (NYSE: SOL) is a solar power-focused renewable energy company. It has three segments: Solar Power Project Development, EPC services, and Electricity Generation Revenue. The company also develops community solar gardens and ranks 11th on our list of the best solar energy stocks to invest in.
This May, ReneSola Ltd (NYSE: SOL) was reported to have raised its revenue substantially in the first quarter because of projects in Hungary and Utah. The adjusted income for Q1 rose to $3 million, an improvement from the net loss of $2 million in last year’s first quarter. In Q1 2021, ReneSola Ltd’s (NYSE: SOL) EPS was $0.05, beating estimates by $0.07. Its revenue came in at $22.77 million, representing a 7.62% growth year over year and beating estimates by $2.77 million.
By the end of the first quarter of 2021, 3 hedge funds out of the 866 tracked by Insider Monkey held stakes in ReneSola Ltd (NYSE: SOL). The total value of their stakes was roughly $146 million. This is compared to the previous quarter’s 3 hedge fund holders with a total stake value of approximately $138 million. Like Sunnova Energy International Inc. (NYSE: NOVA), Tesla, Inc. (NASDAQ: TSLA), NextEra Energy, Inc. (NYSE: NEE), and Brookfield Renewable Corporation (NYSE: BEPC), this is a good stock to invest in.
10. Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI)
Number of Hedge Fund Holders: 16
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) is a provider of capital and services to the renewable energy and other sustainable infrastructure markets in the US. The company has energy efficiency projects that aim to reduce energy usage and cost through solar generation. It ranks 10th on our list of the best solar energy stocks to invest in.
This May, Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) declared a quarterly dividend of $0.35 per share, with a forward yield of 2.88% payable on July 9th. In the first quarter of 2021, Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) had EPS of $0.43, beating estimates by $0.04. Its revenue for the quarter was $24.11 million, showcasing a 6.23% growth year over year and beating estimates by $1.38 million. The stock has gained 101.16% in the past year. The company has a gross profit margin of 100%.
By the end of the first quarter of 2021, 16 hedge funds out of the 866 tracked by Insider Monkey held stakes in Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI). The total value of their stakes was roughly $117 million. This is compared to the previous quarter’s 12 hedge fund holders with a total stake value of approximately $94.5 million. Like Sunnova Energy International Inc. (NYSE: NOVA), Tesla, Inc. (NASDAQ: TSLA), NextEra Energy, Inc. (NYSE: NEE), and Brookfield Renewable Corporation (NYSE: BEPC), this is a good stock to invest in.
9. Daqo New Energy Corp. (NYSE: DQ)
Number of Hedge Fund Holders: 17
Daqo New Energy Corp. (NYSE: DQ) is a polysilicon manufacturer for photovoltaic products in China. The company’s polysilicon is processed into ingots, wafers, cells, and modules for solar power generation. It ranks 9th on our list of the best solar energy stocks to invest in.
On June 1st, Daqo New Energy Corp. (NYSE: DQ) rallied in light of announcements saying that the company would be applying for an IPO of its subsidiary Xinjiang Daqo New Energy. Daqo New Energy Corp. (NYSE: DQ) also provided second-quarter guidance on the subsidiary’s revenues, expecting them to be at least $386.2 million. In the first quarter of 2021, Daqo New Energy Corp. (NYSE: DQ) had EPS of $1.08, beating estimates by $0.19, and its revenue was $256.1 million, representing a 51.69% growth year over year but missing estimates by $41.87 million. The stock has gained 2.86% in the past 6 months.
By the end of the first quarter of 2021, 17 hedge funds out of the 866 tracked by Insider Monkey held stakes in Daqo New Energy Corp. (NYSE: DQ). The total value of their stakes was roughly $129 million. This is compared to the previous quarter’s 18 hedge fund holders with a total stake value of approximately $123 million. Like Sunnova Energy International Inc. (NYSE: NOVA), Tesla, Inc. (NASDAQ: TSLA), NextEra Energy, Inc. (NYSE: NEE), and Brookfield Renewable Corporation (NYSE: BEPC), this is a good stock to invest in.
8. Canadian Solar Inc. (NASDAQ: CSIQ)
Number of Hedge Fund Holders: 17
Canadian Solar Inc. (NASDAQ: CSIQ) is a renewable energy company focused on manufacturing solar ingots, wafers, cells, modules, and other solar power products. The company has two segments: Module and System Solutions and Energy. It ranks 8th on our list of the best solar energy stocks to invest in.
On June 24th, Canadian Solar Inc. (NASDAQ: CSIQ) announced its acquisition of a $59.7 million facility to support growth in the global energy business. The company also mentioned plans for expanding its project development pipelines in Africa, Europe, and the Middle East. In the first quarter of 2021, Canadian Solar Inc. (NASDAQ: CSIQ) had EPS of $0.36, missing estimates by $0.03, and revenue of $1.09 billion. The latter represented a 31.94% growth year over year and beat estimates by $49.14 million. The stock has gained 102.14% in the past year as well.
By the end of the first quarter of 2021, 17 hedge funds out of the 866 tracked by Insider Monkey held stakes in Canadian Solar Inc. (NASDAQ: CSIQ). The total value of their stakes was roughly $96.4 million. This is compared to the previous quarter’s 14 hedge fund holders with a total stake value of approximately $118 million. Like Sunnova Energy International Inc. (NYSE: NOVA), Tesla, Inc. (NASDAQ: TSLA), NextEra Energy, Inc. (NYSE: NEE), and Brookfield Renewable Corporation (NYSE: BEPC), this is a good stock to invest in.
7. SunPower Corporation (NASDAQ: SPWR)
Number of Hedge Fund Holders: 18
SunPower Corporation (NASDAQ: SPWR) is a solar power company operating globally to provide solar solutions. The company operates through its Residential, Light Commercial, Commercial and Industrial Solutions, and Others segments. It ranks 8th on our list of the best solar energy stocks to invest in.
On June 3rd, SunPower Corporation’s (NASDAQ: SPWR) CEO highlighted the growth potential for the solar industry lying in the rooftop market of about 100 million US homes. He also said that the solar business was “ripe” for digital innovation, which would simplify solar and solar-related products. In the first quarter of 2021, SunPower Corporation’s (NASDAQ: SPWR) EPS was $0.05, beating estimates by $0.03, and its revenue came in at $305.78 million, missing estimates by $0.98 million. The stock has gained 5.59% in the past 6 months and 9.76% year to date.
By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in SunPower Corporation (NASDAQ: SPWR). The total value of their stakes was roughly $182 million. This is compared to the previous quarter’s 24 hedge fund holders with a total stake value of approximately $345 million. Like Sunnova Energy International Inc. (NYSE: NOVA), Tesla, Inc. (NASDAQ: TSLA), NextEra Energy, Inc. (NYSE: NEE), and Brookfield Renewable Corporation (NYSE: BEPC), this is a good stock to invest in.
6. First Solar, Inc. (NASDAQ: FSLR)
Number of Hedge Fund Holders: 24
First Solar, Inc. (NASDAQ: FSLR) is a renewable energy company focusing on solar power. It provides photovoltaic solar energy solutions in the US, Japan, France, Canada, India, Australia, and internationally. The company operates through its Modules and Systems segments and ranks 6th on our list of the best solar energy stocks to invest in.
On June 10th, Citi analysts raised EBITDA estimates for First Solar, Inc. (NASDAQ: FSLR) from the previous $555 million figure to $625 million in light of the company’s increased module production. The firm also reiterated its Buy rating for the stock alongside the $100 price target put on it. Bank of America also upgraded First Solar, Inc. (NASDAQ: FSLR) to Buy this May, with a $91 price target because of the company’s positive earnings in the first quarter. According to the Wall Street Journal, the company itself also announced on June 9th that it would be spending about $680 million to build a new solar panel factory in Ohio. The factory is expected to produce 3 GW of power in a year or enough energy to power 570,000 homes.
In the first quarter of 2021, First Solar, Inc. (NASDAQ: FSLR) had EPS of $0.81, missing estimates by -$0.03, and its revenue came in at $803.37 million at a 50.97% increase year over year. The revenue also beat estimates by $86.34 million. The stock has also gained 67.75% in the past year.
By the end of the first quarter of 2021, 24 hedge funds out of the 866 tracked by Insider Monkey held stakes in First Solar, Inc. (NASDAQ: FSLR). The total value of their stakes was roughly $304 million. This is compared to the previous quarter’s 34 hedge fund holders with a total stake value of approximately $406 million.
White Brook Capital, an investment management firm, mentioned First Solar, Inc. (NASDAQ: FSLR) in their first quarter 2021 investor letter. Here’s what they said:
“First Solar (FSLR) and Itron (ITRI), both of which I’ve written about in past In Focus sections were long-term positions that were sold as their prices exceeded price targets. Both are solid companies that remain on my watchlist, but the opportunity cost of not investing in other potential investments exceeded their potential mid-term returns.”
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Disclosure: None. 12 Best Solar Energy Stocks to Invest In is originally published on Insider Monkey.
