12 Most Promising Solar Stocks According to Analysts
In this article, we discuss the 12 most promising solar stocks according to analysts. To skip the detailed overview of the solar industry, go directly to the 5 Most Promising Solar Stocks According to Analysts.
Solar energy stocks took a beating in 2023. Global X Solar ETF (RAYS) and Invesco Solar ETF (TAN) are down 41.38% and 29.83% for the year, respectively. The high-interest rate environment made a bearish case for solar stocks throughout the year due to a demand drop among retail customers. Moreover, California’s Net Energy Metering 3.0 policy has reduced incentives for rooftop solar owners drastically.
However, Raymond James Managing Director Pavel Molchanov has a different reflection on the industry. In an interview, he revealed that solar installations are at a record high. He told Yahoo Finance:
“Well, I know it might seem surprising. But actually, the amount of solar installations in 2023 is a record globally, including a record in the United States. So it's not a volume problem. It's, in some cases, more of a margin problem. And, of course, for the stocks, as distinct from the fundamentals, it's also a question of valuation, right? So stocks can be down even if the fundamental business trends are actually up.
But look, this year, 300 gigawatts of solar will be installed around the world, which is an all-time high, 30 gigawatts in the US, also an all-time high. So it's actually not as bad as you might think.”
In any case, the Fed's latest meeting also made the market a little optimistic about the industry. The Fed hinted at a few potential rate cuts in the coming year, which caused upward movement in solar stocks. Between December 12 and December 20, Global X Solar ETF (RAYS) has gained 7%, while Invesco Solar ETF (TAN) was almost 14% higher during the period.
Industry Forecasts
According to a Solar Energy Industries Association (SEIA) and Wood Mackenzie report, the US solar generating capacity is expected to end the year with 33 GigaWatts-direct current of new installations, showing a 55% increase from the prior year. Over the next five years, the report predicts an average annual growth of 14%. However, the report states that most of the growth will be seen in 2024 and 2025, and it will drop to low single digits in 2026. The US Energy Information Administration believes that electricity generation from solar and wind combined might surpass electric power generation from coal for the first year ever in 2024. Moreover, SEIA and Wood Mackenzie expect that by 2050, solar energy will account for the largest electricity generation capacity on the US grid.
Piper Sandler has shown quite a bullish sentiment toward solar stocks as the firm upgraded Sunnova Energy International Inc. (NYSE:NOVA) and Sunrun Inc. (NASDAQ:RUN) from Neutral to Overweight on December 19. The firm believes that residential installers are expected to see the most benefits of lower interest rates and will start to accumulate them as early as 2024. However, the US residential installation demand could drop around 20% in the coming year, the firm adds. Nextracker Inc. (NASDAQ:NXT) and Itron, Inc. (NASDAQ:ITRI) are Piper Sandler’s favorite ideas for the coming year in the solar industry.
Despite the losses in 2023, solar stocks have shown strength over the long term. Invesco Solar ETF (TAN)’s five-year average annualized returns were nearly 22%, according to our October report. Moreover, the fund returned 127.9%, 54.5%, and 66.5% during 2013, 2017, and 2019, respectively. Keeping that in mind, iSun, Inc. (NASDAQ:ISUN), Beam Global (NASDAQ:BEEM), and Tigo Energy, Inc. (NASDAQ:TYGO) are some of the most promising solar stocks according to analysts.
A top view of a residential building, showing solar panels and energy efficient solutions.
Our Methodology
For this article, we created a list of solar energy companies using the Yahoo Finance stocks screener. Next, we chose the stocks with the highest average analyst price target upside as of December 20. The analyst price targets were taken from TipRanks.
We only chose the companies that were covered by at least two analysts and didn’t have many Hold or Sell ratings as compared to Buy-equivalent ratings. The most promising solar stocks according to analysts are listed in ascending order of their average analyst price target upside.
While our current article is based on average analyst ratings and price targets, Insider Monkey tracks the movements of corporate insiders and hedge funds. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator. For consensus picks of top hedge funds, you can check out 11 Most Undervalued Solar Stocks To Buy According To Hedge Funds and 16 Most Undervalued Value Stocks To Buy According To Hedge Funds.
Most Promising Solar Stocks According to Analysts
12. Nextracker Inc. (NASDAQ:NXT)
Average Analyst Price Target Upside: 12.11%
Average Analyst Price Target: $50.64
Nextracker Inc. (NASDAQ:NXT) is a California-based company that offers integrated solar tracker and software solutions.
On December 13, Nextracker Inc. (NASDAQ:NXT) announced that its working and under-fulfillment orders of smart solar tracks surpassed the mark of 10 GW.
Of the 16 Wall Street analysts that covered Nextracker Inc. (NASDAQ:NXT) over the last three months, 14 maintained a Buy rating on the stock. As of the December 20 market close, the average price target of $50.64 represented an upside of 12.11%.
Nextracker Inc. (NASDAQ:NXT) is one of the most promising solar stocks according to analysts along with iSun, Inc. (NASDAQ:ISUN), Beam Global (NASDAQ:BEEM), and Tigo Energy, Inc. (NASDAQ:TYGO).
11. Canadian Solar Inc. (NASDAQ:CSIQ)
Average Analyst Price Target Upside: 28.52%
Average Analyst Price Target: $31.14
Canadian Solar Inc. (NASDAQ:CSIQ) is a Canadian company that offers solar module products for converting sunlight into electricity.
On December 7, Canadian Solar Inc. (NASDAQ:CSIQ) announced that it was awarded the largest battery storage project in the U.K., a 500 MW energy storage supply and integration contract, for Copenhagen Infrastructure Partners’ Coalburn 1 project in Scotland.
On December 6, Canadian Solar Inc. (NASDAQ:CSIQ) reported that it will provide 226 MWh DC of turnkey energy storage solutions to Engie (OTC:ENGIY) in the UK under an engineering, procurement, and construction agreement.
As per the company’s announcement on November 27, Canadian Solar Inc. (NASDAQ:CSIQ) was once again chosen as Copenhagen Infrastructure Partners' preferred supplier for a 240 MW DC energy storage solution project in South Australia.
10. Altus Power, Inc. (NYSE:AMPS)
Average Analyst Price Target Upside: 28.53%
Average Analyst Price Target: $8.29
Altus Power, Inc. (NYSE:AMPS) is a Connecticut-based developer and operator of solar generation, energy storage, and charging infrastructure across the U.S.
On December 20, Altus Power, Inc. (NYSE:AMPS) announced that it acquired Unico Solar Investor’s core business. Under the acquisition, Altus Power, Inc. (NYSE:AMPS) will get Unico Solar’s pipeline, development platform, Denver and Seattle offices, and senior leadership team.
On November 13, Altus Power, Inc. (NYSE:AMPS) announced a step further in achieving its expansion target by closing on its Blackstone Construction Facility. The facility will be used to construct commercial solar assets and has a funding capacity of $200 million allocated for covering costs.
9. First Solar, Inc. (NASDAQ:FSLR)
Average Analyst Price Target Upside: 40.15%
Average Analyst Price Target: $230.68
First Solar, Inc. (NASDAQ:FSLR) is an Arizona-based company involved in the designing and manufacturing of solar modules. It provides its services and products through various subsidiaries, including but not limited to, First Solar Inc., First Solar Malaysia Sdn. Bhd., and Evolar AB.
On December 19, Piper Sandler analyst Kashy Harrison lowered the price target on First Solar, Inc. (NASDAQ:FSLR)’s stock to $195 from $235 and maintained an Overweight rating on the shares.
First Solar, Inc. (NASDAQ:FSLR) was covered by 21 Wall Street analysts, and 17 kept a Buy rating on the stock. The average price target of $230.68 had an upside of 40.15% at the December 20 market close.
According to Insider Monkey’s database, the number of funds with investments in First Solar, Inc. (NASDAQ:FSLR)’s stock was 49 in the third quarter, down from 51 in the previous quarter, but the total funds’ stake value increased to $1.07 billion in Q3 from $884.498 million in Q2.
8. Sunnova Energy International Inc. (NYSE:NOVA)
Average Analyst Price Target Upside: 41.99%
Average Analyst Price Target: $20.12
Sunnova Energy International Inc. (NYSE:NOVA) is a Texas-based company that offers residential solar and energy storage services.
22 Wall Street analysts covered Sunnova Energy International Inc. (NYSE:NOVA), and 19 maintained a Buy-equivalent rating on the stock. At the time of writing on December 20. The average price target of $20.12 represented an upside of 41.99%.
In the third quarter, the hedge fund sentiment was positive toward Sunnova Energy International Inc. (NYSE:NOVA) as 22 hedge funds held a stake in the stock, up from 19 funds in the previous quarter. New York-based Electron Capital Partners was the top investor in the company and increased its stake by 43% to 5.3 million shares worth $55.58 million.
On December 19, Piper Sandler upgraded Sunnova Energy International Inc. (NYSE:NOVA)’s stock to an Overweight rating from a Neutral rating and increased the price target to $26 from $13.
7. Array Technologies, Inc. (NASDAQ:ARRY)
Average Analyst Price Target Upside: 52.76%
Average Analyst Price Target: $25.45
Array Technologies, Inc. (NASDAQ:ARRY) is a New Mexico-based company that provides solar systems and solutions like solar tracking systems and solar racking systems.
In the third quarter, Array Technologies, Inc. (NASDAQ:ARRY) announced its Q3 earnings result with a non-GAAP EPS of $0.21, topping the analysts’ estimates by $0.08, and the revenue of the quarter was $350.4 million.
Out of the 20 Wall Street analysts that covered Array Technologies, Inc. (NASDAQ:ARRY), 14 kept a Buy rating on the stock. The average price target of $25.45 had an upside of 52.76% as of December 20.
6. Shoals Technologies Group, Inc. (NASDAQ:SHLS)
Average Analyst Price Target Upside: 59.14%
Average Analyst Price Target: $24.38
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is a Tennessee-based company that offers electrical balance of systems for solar energy projects in the U.S.
On December 19, Piper Sandler analyst Kashy Harrison lowered the price target on Shoals Technologies Group, Inc. (NASDAQ:SHLS)’s stock to $20 from $28 and maintained an Overweight rating on the shares.
According to Insider Monkey’s database, the hedge fund sentiment was quite positive toward Shoals Technologies Group, Inc. (NASDAQ:SHLS) in Q3. In the quarter, 33 hedge funds were bullish on the stock, up from 24 in the prior quarter. Billionaire Ken Griffin’s Citadel Investment Group was among the top investors of the firm. The fund increased its stake in Shoals Technologies Group, Inc. (NASDAQ:SHLS) by 75% to 2.041 million shares worth $37.25 million.
iSun, Inc. (NASDAQ:ISUN), Beam Global (NASDAQ:BEEM), and Tigo Energy, Inc. (NASDAQ:TYGO) are some of the most promising solar stocks according to analysts besides Shoals Technologies Group, Inc. (NASDAQ:SHLS).
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Disclosure. None. 12 Most Promising Solar Stocks According to Analysts is originally published on Insider Monkey.
