3 Stocks to Buy for The Continued Growth of Solar Energy
The growth of solar energy has been led by the U.S. and China with now looking like an ideal time for investors to buy solar stocks. Notably, the Zacks Solar Industry is still in the top 28% of over 250 Zacks industries at the time of this writing.
To that point, the growth of photovoltaic technologies (PV) most commonly referred to as solar panels and gigawatts direct current (GWdc) or the power used in production is very intriguing at the moment.
According to the National Renewable Energy Laboratory (NREL), the International Energy Agency (IEA) reported that China’s annual PV installations grew 93% year over year in 2022 representing 44% of total global demand.
The U.S. was the second-largest market in cumulative and annual PV installations with the Biden-Harris Administration announcing in May an $150 million investment to the NREL that will help the laboratory keep America on the cutting edge of clean-energy technology.
Image Source: National Renewable Energy Laboratory
The goal is also for the NREL to lead the world in the transition to carbon-free power sources with the laboratory stating that 240 GWdc of PV was installed globally in 2022.
Analysts project 2023 annual installations to grow to more than 300 GWdc and by 2025 more than 400 GWdc.
With such growth and concentration into solar energy upon us here are three highly-ranked Zacks Solar Industry stocks that investors should consider buying right now.
Image Source: National Renewable Energy Laboratory
Maxeon Solar Technologies (MAXN)
With China being the global leader as it relates to solar energy growth we will start with Singapore-based Maxeon Solar Technologies.
Sporting a Zacks Rank #1 (Strong Buy) Maxeon has exposure to China’s solar energy market through its joint venture with Tianjin Zhonghuan Semiconductor in which it produces its SunPower Performance solar panels.
Furthermore, Maxeon has sales operations in over 100 countries with a strong presence in the Philippines, Malaysia, and Mexico. Maxeon’s earnings are impressively forecasted to climb swing from an adjusted loss of -$6.54 a share last year to $0.11 per share in 2023.
Image Source: Zacks Investment Research
More impressive, fiscal 2024 earnings are forecasted to soar another 443% to $0.59 per share. Trading at $26 a share, Maxeon stock has soared +65% year to date to largely outperform the broader indexes. There could be more upside as EPS estimates have continued to soar over the last 30 days with Maxeon largely surpassing its most recent fiscal first-quarter earnings expectations in May.
Maxeon posted an overwhelming earnings surprise at $0.46 per share compared to Q1 estimates that called for an adjusted loss of -$0.51 a share. In correlation with the rapid bottom-line growth, Maxeon stock has now skyrocketed +117% over the last year.
Image Source: Zacks Investment Research
Array Technologies (ARRY)
Headquartered in Albuquerque New Mexico, Array Technologies sports a Zacks Rank #1 (Strong Buy) and operates principally in Europe, Central America, and Australia.
Specifically, Array is a manufacturer of ground-mounting systems used in solar energy projects. Earnings estimates have remained slightly higher over the last quarter with Array expecting stellar top and bottom line growth.
Annual earnings are projected to soar 137% this year at $0.90 per share compared to EPS of $0.38 in 2022. Plus, fiscal 2024 earnings are expected to climb another 43% to $1.29 per share. Total sales are forecasted to rise 13% this year and leap another 22% in FY24 to $2.28 billion.
Image Source: Zacks Investment Research
Pointing out Array’s P/E valuation is noteworthy at $19 a share and 22.1X forward earnings. This is nicely beneath the industry average of 26.8X and not too far above the S&P 500’s 20.8X. Even better, Array stock trades much more reasonably than its high of 103X over the last year and at a 48% discount to the median of 43.9X.
This is supportive of more upside in Array stock which is up +4% YTD but has climbed +81% over the last year to easily top the S&P 500’s +16% and the Nasdaq’s +24%.
Image Source: Zacks Investment Research
FTC Solar (FTCI)
Also sporting a Zacks Rank #1 (Strong Buy) and headquartered in the U.S. is FTC Solar which is a provider of solar tracker systems, technology, software, and engineering services.
FTC’s niche appears to be growing within the broader solar industry and currently trades at $3 a share with the company rapidly approaching profitability.
Earnings are now expected at an adjusted loss of -$0.11 per share in fiscal 2023 compared to -$0.67 a share in 2022. FTC is expected to be profitable in FY24 with earnings projected at $0.21 per share.
Image Source: Zacks Investment Research
Helping to reconfirm FTC’s potential to turn a profit is the company’s expansive sales growth. Sales are expected to expand 115% this year at $264.29 million soaring from $123.07 million in 2022.
Fiscal 2024 sales are anticipated to be up another 71% to $451.26 million. Such expansion makes FTC stock worthy of consideration with shares of FTCI up a very respectable +22% YTD. Notably, the average Zacks Price Target of $4.69 per share suggests 50% upside from current levels.
Image Source: Zacks Investment Research
Takeaway
The top and bottom line growth of these Zacks Solar Industry stocks is very intriguing at the moment and this should continue with the U.S. and China leading the global expansion into renewable solar energy.
It would be no surprise if Maxeon Solar Technologies, Array Technologies, and FTC Solar stock continue to rise as they are starting to look like viable investments for 2023 and beyond.
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