Elon Musk had pointed out 2019 as “the year of the solar roof,” but we have to wait for fourth-quarterly earnings reports to see if it really was. Overall, 2019 was a good year for solar firms as the Invesco Solar ETF (TAN) rose 63.9% compared to the S&P 500 Index’s rise of 29.8%.
Solar stocks are growing steadily as demand for solar energy among homeowners has increased. Moreover, the investment tax credit ends next year and this is likely to push American households to opt for solar power rapidly.
Residential Solar to Score High in 2020
In third-quarter 2019, American residential solar market had reached record highs. Per a report from the Solar Energy Industries Association, in Q3 of 2019 712 megawatt of photovoltaics (PV) was installed. The association now expects that total installed PV capacity to double by 2025 and installations to reach 20.1 GW in 2021.
Last October, more than 2 million people across California were affected by power outages. These preemptive power outages were consistent in California and deliberate blackouts had bothered Pacific Gas and Electric Company customers. The utility companies are still trying hard to find ways to prevent their power lines from sparking new blazes and stop wild fire disasters.
Meanwhile, the cost of grid electricity has either stayed constant or increased, and services seem to be deteriorating, with more frequent blackouts and risks of wild fires. This, if not tax benefits, has made homeowners flee to alternative energy sources, especially solar.
What’s more? Installations of solar panels are becoming more cost-effective every year. Higher demand and decline in cost will surely benefit the solar market in 2020.
Sun Shines on Manufacturers, Installers and Suppliers
With the sun shining brighter, big tech players like Tesla, Inc. TSLA are looking forward to make the most of the new developments in the solar space. With Tesla Solar’s new solar roof tile, the company can fare well this year. In fact, to make 2020 “the year of the solar roof,” this Zacks Rank #2 (Buy) company has to work on its solar deployment, increasing it to maximum capacity possible.
From rooftop system to utility-scale power plant, solar energy is now cost-competing with fossil fuels in most parts of the country. The three main players in the solar market — manufactures, installers and suppliers — are expected to make the most in 2020.
From exclusive solar roof tile maker Tesla to exclusive rights holding manufacturers of solar panels, all are working extensively to offer out-of-the-box solutions to residential and commercial customers. The requirement hovers around high-efficiency panels along with inverters, energy storage, and monitoring platform, and manufacturers are trying to develop a cheaper and customer-friendly variant each year. Here are two manufacturers that are poised to excel this year.
JinkoSolar Holding Co., Ltd. JKS engages in design, development, production and marketing of photovoltaic products. The company offers solar modules, silicon wafers, solar cells, recovered silicon materials and silicon ingots, globally. The company’s expected earnings growth rate for the current year is 51.2% compared with the Zacks Solar industry’s projected earnings growth of 12.8%. JinkoSolar, a Zacks Rank #1 (Strong Buy) company, soared more than 100% last year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enphase Energy, Inc. ENPH, the top gainer of 2019 with more than 496% rise, came up with better-than-expected earnings in Q3 and upbeat guidance for 2019 that cheered solar investors. The company designs, develops and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. Its expected earnings growth rate for the current year is more than 100%. Enphase Energy carries a Zacks Rank #2.
According to the IHS Markit new 2020 Global Photovoltaic (PV) Demand Forecast, “global solar installations will continue double-digit growth rates into the new decade.” New installations are expected to reach 142 GW in 2020, suggesting a 14% rise from 2019. Additionally, installations are expected to grow 20% in the United States this year, making it the world’s second-largest market. And California, Texas, Florida, North Carolina and New York will drive growth in the next five years.
America’s second-largest solar installer Vivint Solar, Inc. VSLR reported $1.6 billion of contracted retained value and $700 million of retained value net of debt at the end of Q3 2019. This company that owns and installs solar energy systems through long-term customer contracts normally takes on financing, foregoing upfront payments in exchange for a 20-year contract to sell electricity to the property owner.
Moreover, lower interest rates this year are a boon for Vivint Solar. The company can easily finance its future cash inflows at a lower rate, and in turn will have more money left to return to its shareholders. The company's expected earnings growth rate for the quarter ending March 2020 is 90.9%. Vivint Solar carries a Zacks Rank #3 (Hold).
Presently in the solar market, value is created from power optimizers and inverters. Here, SolarEdge Technologies, Inc. SEDG has established itself as a prime player. The company is a supplier of power optimizers, which maximize the direct current power generated by solar panels and monitors it into everything from inverters to energy storage.
The company’s expected earnings growth rate for the current year 27.8%. Zacks #3 Ranked SolarEdge acts as a platform monitoring their installations' performance, and to provide monitoring devices that its customers can view. With installations growing, these suppliers are set to grow.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Tesla, Inc. (TSLA) : Free Stock Analysis Report
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