9 Best Solar Power Stocks to Consider - Cabot Wealth Network

9 Best Solar Power Stocks to Consider

Image of solar panels to represent Renewable Energy Stocks and solar power stocks

Alternative energy is making a comeback. Here are nine solar power stocks worth considering including tips for finding the best solar company to invest in.

Energy stocks have made a nice comeback of late, and there’s one small slice of the energy business that’s been super strong, thanks to both improving technology and governmental support, both in the U.S. and internationally—and that’s the solar power business and solar power stocks.

In the U.S., residential solar installations were up 23% before the pandemic hit, bringing the installed base to 45.5 GW—enough to power 13.5 million homes. And that growth should continue, with solar capacity forecast to more than double over the next five years.

Internationally, the northern European countries are ahead on a Watt per capita basis, but China already has the greatest installed solar capacity, with more than 200 GW installed and more than 50 GW installed in 2019 alone.

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Someday, the giants of this industry will be well-known behemoths, whose names will roll off the tongue just as ExxonMobil and Con Edison and Florida Power and Light do today. But at the moment, it’s a real horse race, with more than a dozen fast-growing public companies racing to both get big fast and to deliver earnings to their shareholders—which means there are great investment opportunities in solar power stocks.

Today, I look at the nine best solar power stocks, starting with the strongest and working my way down to help you find best solar company to invest in.

The 9 Best Solar Power Stocks

Enphase Energy (ENPH)
Located in sunny California, Enphase is the world’s leading supplier of microinverters, which convert direct current (DC) energy from solar modules into alternating current (AC). Its products are used all around the world (U.S., Europe, Australia), though it’s notably weak in the Chinese market. And it has recently begun selling battery storage systems.

Daqo New Energy (DQ)
Daqo is a Chinese company focused on silicon, the raw material behind the word’s solar panels. Selling directly to manufacturers, it has a concentrated customer base. Daqo has been consistently profitable for years—though patterns are uneven.

Sunova Energy (NOVA)
Based in Houston, Sunova offers residential solar power systems and backup batteries in 20 states using a variety of power purchase and lease arrangements (which tend to provide great visibility into future revenue streams). There are currently no earnings, as the company is investing for the future.

JinkoSolar (JKS)
Vertically integrated JinkoSolar is the world’s leading maker of silicon wafers, solar cells and modules, which it makes in China and sells to companies all over the world.

Sunrun (RUN)
Sunrun is the leading residential solar installer in the U.S., with about 16% market share. Customers sign 20- to 25-year contracts, so future cash flows are very visible.

SolarEdge Technologies (SEDG)
Based in Israel, SolarEdge is the second microinverter company in the industry, and like Enphase, it too sells all over the world.

Canadian Solar (CSIQ)
Based in Ontario, Canadian Solar is the world leader in making and installing utility-scale solar power, having delivered systems to customers in over 150 countries.

SunPower (SPWR)
The granddaddy of the industry, founded way back in 1985, Sunpower is based in California, where it manufactures solar cells and modules.

First Solar (FSLR)
Arizona-based First Solar makes and sells solar cells and modules for residential and commercial markets all over the world. But the company is mature, struggling to maintain growth. FSLR was a hot stock back in 2007, but it’s been trending sideways for several years.

How to Choose the Best Solar Company to Invest In

The ideal combination would be a company with:

  • strong (even accelerating) revenue growth,
  • strong earnings growth, a good growth story,
  • and a strong chart that’s hit recent record highs and is now on a normal pullback.

Lastly—and this is hard to quantify—the ideal stock is not over-owned and has great potential to climb higher as more investors become aware of it and develop positive opinions about it.

None of these solar power stocks meet all these criteria, which is not surprising. But the ones that come closest are Enphase (ENPH), Sunova (NOVA), Sunrun (RUN) and Solaredge (SEDG).

How to Invest In Renewable Energy

As you search for solar stocks, don’t forget that there is an entire renewable energy industry. Electric vehicles are becoming more common, and General Motors (GM) plans to sell only zero-emission vehicles by 2035. Wind and hydroelectric power is a growing force in renewable energy solutions. 

Alternatively, if you want a somewhat diversified way to invest in companies that are trying to improve energy efficiency, Hannon Armstrong (HASI) should be up your alley. The company provides capital to companies in the energy efficiency, renewable energy and other sustainable infrastructure markets. In exchange for capital to advance their businesses Hannon generates recurring revenue and predictable cash flows. And the stock, while down in 2021, is still up 16% in the last year.

What else would you like to know about solar power stocks? Leave your question in the comments below.

Timothy Lutts

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Timothy Lutts heads one of America’s most respected independent investment advisory services. Each week, Tim personally picks the single best stock in his exclusive Cabot Stock of the Week advisory. Build your wealth and reduce your risk with the top stock each week for current market conditions

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*This post has been updated from an original version, published in 2020.

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