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3 Solar Stocks Worth Buying Ahead of This Earnings Season

Aparajita Dutta

U.S. solar stocks started 2019 on a solid note, with growth projections provided by analysts in view of rapidly declining solar module costs and consequent increase in installations. This marked a dramatic reversal from 2018 when major policy changes by the U.S. and Chinese governments - the global solar leaders – created a topsy-turvy situation for solar players.

Coming to first-quarter performance, the industry outperformed the broader market. Evidently, the solar market gained a solid 28.9% in the January quarter compared with the S&P 500 Composite’s rise of 13.7%.

We have briefly mentioned some projections and the factors leading to such estimations. These should make investors confident about the below mentioned solar stocks’ capability to post strong first-quarter numbers.

A Solid Rebound

The U.S. solar industry experienced catastrophic loss of 26.9% in 2018 largely due to tariffs that were imposed on solar cells and modules. These tariffs caused a few cancellations of solar projects and obstructions in the industry’s growth trajectory. Per a report by The Solar Foundation, solar employment declined nearly 3.2% in 2018 from 2017. However, recent forecasts reflect increased chances of the market rebounding this year.

With a backlog of utility-scale projects and new policy incentives in key states, the outlook for solar jobs is expected to improve in 2019. Survey respondents predict that solar jobs will increase 7% in 2019. Per the latest insight report by the Solar Energy Industries Association (SEIA), total installed PV capacity in the United States is expected to rise 14% in 2019. We may expect the U.S. solar space to reflect similar growth trends.

Factors Driving Solar Growth

Deployment of utility-scale projects remains a major growth driver for the U.S. solar market. Moreover, decline in module costs due to a shift in Chinese feed-in tariff policy is driving procurement of utility-scale solar projects. Other growth catalysts include the technological advances made for battery storage and grid operators’ expanding toolset for renewable power integration. Such developments must have led Wood Mackenzie to lift its utility solar forecast for 2019 to 7.2 gigawatt-direct current (GWdc) from 6.9 GWdc.

Our Choices

With the help of the Zacks Stock Screener, we have identified three solar stocks that possess a favorable Zacks Rank and solid long-term earnings growth expectations.

Canadian Solar Inc. CSIQ, a manufacturer of solar PV modules, boasts a solid long-term earnings growth rate of 32%.  It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sunworks Inc. SUNW, a solar power systems provider, boasts a solid long-term earnings growth rate of 10%.  It currently sports a Zacks Rank #1.

Sunrun Inc. RUN, a solar energy systems provider, has a solid long-term earnings growth rate of 20.8%.  It currently carries a Zacks Rank #2.

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