We recently compiled a list of the 8 Most Promising Solar Stocks According to Hedge Funds. In this article, we are going to take a look at where Sunrun Inc. (NASDAQ:RUN) stands against the other most promising solar stocks according to hedge funds.
The solar industry has experienced significant growth over the past four years, largely due to supportive policies from the Biden administration. The industry’s resilience is notable, as analysts and industry officials believe that solar power’s rise can withstand potential policy changes under the Trump administration, which has pledged to dismantle clean power subsidies and related policies.
However, there are several hurdles to overcome. Trump has pledged to impose a 10% tariff on goods from China, a critical source of solar components for U.S. developers. This tariff, in addition to those already imposed by the Biden administration, is likely to increase the cost of new solar projects, potentially slowing installations until domestic supply chains can ramp up. The domestic solar supply chain is also rapidly expanding and many new solar component manufacturing plants are located in states that voted for Trump in 2024. These manufacturers argue that the administration needs to maintain its current course to foster further growth. The cost of solar projects will also depend on whether the Trump administration follows through on its promises to roll back critical subsidies and tax breaks established by Biden’s 2022 climate law.
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According to a report by S&P Global published on January 13, the clean energy sector is experiencing significant transformations, with solar photovoltaic (PV) technology taking center stage. The report, titled “Top Cleantech Trends for 2025,” forecasts that cleantech energy supply investments, including solar PV, will reach $670 billion in 2025, marking the first time these investments will outpace projected upstream oil and gas spending. Solar PV is expected to represent a substantial portion of these investments, accounting for half of all cleantech investments and two-thirds of installed megawatts. This shift underscores the growing dominance of renewable technologies, particularly solar, in the global energy landscape.
The report highlights that despite the significant financial commitment to solar PV, the overall investment levels remain insufficient to meet urgent climate goals of tripling renewable capacity by 2030. The report also addresses the challenges and opportunities within the evolving solar supply chain. An oversupply of solar equipment from China is affecting the solar, wind, and battery sectors, leading to price declines that may stabilize in 2025. However, the competition from Chinese manufacturers is expected to keep prices low, fundamentally altering industry pricing dynamics.
Despite uncertainties, the trajectory of solar power remains overwhelmingly positive, driven by technological advancements, increasing investments, and the urgent need to meet global climate goals.
A field of solar panels glistening in the afternoon sun, symbolizing the company’s renewable energy ambitions.
Our Methodology
To compile our list of the 8 most promising solar stocks according to hedge funds, we used Finviz and Yahoo stock screeners, and clean energy ETFs to compile an initial list of 25 solar energy stocks. We then used Insider Monkey’s Hedge Fund database to rank 8 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Investors: 43
Sunrun Inc. (NASDAQ:RUN) is one of the largest residential solar and battery storage providers in the United States. The company offers solar panel installations through long-term subscription-based leases, power purchase agreements (PPAs), and direct sales. Sunrun Inc. (NASDAQ:RUN) also provides energy storage solutions and virtual power plant (VPP) services.
Sunrun Inc. (NASDAQ:RUN) is evolving into a multi-product company, focusing on upselling and cross-selling to boost revenue. The company is actively testing and scaling new products and services for new customers while offering storage solutions to its existing customer base. Notably, approximately 87% of its one million customers have yet to adopt the company’s storage systems, presenting significant growth opportunities. This emphasis on storage enhances the customer value proposition by providing backup power and aligns with the company’s higher-margin strategy. Sunrun Inc. (NASDAQ:RUN) is leveraging its app to streamline sales, making it simple and cost-effective for customers to add additional products.
Additionally, Sunrun Inc. (NASDAQ:RUN) is partnering with leading home builders to integrate solar and storage solutions into new homes. The company collaborates with 9 of the top 10 home builders in California and more than half of the top 20 home builders nationwide. These partnerships are pivotal in broadening the company’s market reach, ensuring that new homeowners have access to clean, affordable, and resilient energy from the outset.
Overall RUN ranks 2nd on our list of the most promising solar stocks according to hedge funds. While we acknowledge the potential of RUN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RUN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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