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9 Solar Stocks Heating Up on Energy Crisis Concerns

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·9 min read
In this article:
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  • JinkoSolar (JKS): As the world’s largest solar panel manufacturer, JinkoSolar commands serious potential.

  • SolarEdge Technologies (SEDG): Specializing in solar inverters, SolarEdge brings practical solutions to the energy crisis.

  • Enphase Energy (ENPH): Enphase’s energy bank system extracts enhanced utility from solar stocks.

  • Canadian Solar (CSIQ): Manufacturing photovoltaic modules, Canadian Solar serves the entire range of renewable solutions.

  • Daqo New Energy (DQ): Developing critical components for photovaltaic systems, Daqo enjoys near-term momentum.

  • First Solar (FSLR): Focusing on advanced modules, First Solar increases efficiencies of renewable solutions.

  • SunPower (SPWR): Installing solar power products for home and commercial use, SunPower aids the transition to green energy.

  • Sunnova (NOVA): Targeting residential needs, Sunnova drives both home-energy efficiencies and EV solutions.

  • ReneSola (SOL): An adventurous idea among solar stocks, ReneSola could yield significant gains.

A photo of two men installing a solar panel.
A photo of two men installing a solar panel.

Source: Shutterstock

Although the year is still relatively young, 2022 is shaping up to be the chapter where the American people — indeed, global citizens — can’t seem to catch a break. Suffering from rising costs due to blistering inflation, many had hopes that circumstances would eventually normalize. Then, Russia invaded Ukraine, sending shockwaves to the system. About the only positive we have is a renewed focus on solar stocks to buy.

It’s not just about the profitability potential of renewable energy solutions, though that’s obviously going to be a factor. Rather, the more pertinent consideration for solar stocks is that the underlying segment can help drive holistic independence. Should we pivot more of our power extraction from renewables, American society will enjoy multiple downwind benefits, such as greater viability for electric vehicles.

Additionally, the sharpened focus for solar stocks to buy will likely spark better environmental outcomes. According to a Bloomberg report, part of the reason why Californians in particular witnessed sharp spikes in their utility bills was that a pernicious drought limited the capacity of hydroelectric power. Thus, it’s quite possible that renewable platforms can help ease the strain that our rather antiquated grid is presenting suffering from.

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Of course, no investment class is without risk. Frankly, renewable energy plays have been volatile, likely due to the newness factor impeding profitability. Still, the geopolitical flashpoint in eastern Europe may be the wake-up call necessary to revitalize solar stocks to buy.

Ticker

Company

Current Price

JKS

JinkoSolar

$48.29

SEDG

SolarEdge Technologies

$322.37

ENPH

Enphase Energy

$201.78

CSIQ

Canadian Solar

$35.36

DQ

Daqo New Energy

$41.32

FSLR

First Solar

$83.74

SPWR

SunPower

$21.48

NOVA

Sunnova

$23.06

SOL

ReneSola

$5.81

JinkoSolar (JKS)

As one of the world’s largest solar panel manufacturers, JinkoSolar (NYSE:JKS) carries significant relevance that shouldn’t go ignored. Back in 2020, JinkoSolar generated revenue of $5.37 billion, up nearly 27% against 2019’s tally of $4.24 billion. Despite the extraordinary disruption that the coronavirus pandemic caused, many homeowners decided to put their government stimulus checks to work by going solar.

Back then, it wasn’t just Covid-19 that caused problems across the nation. Rolling blackouts due to climate change and poor planning negatively impacted several states, driving the case organically for solar stocks to buy. However, the devastating fallout from soaring consumer inflation along with sharp rumblings in the global energy sector will likely lift demand for JinkoSolar and similar companies.

On a year-to-date basis through the March 29 session, JKS is up almost 14%, signifying renewed interest in solar stocks.

SolarEdge Technologies (SEDG)

Headquartered in Israel, SolarEdge Technologies (NASDAQ:SEDG) specializes in solar inverters, which represents one of the most critical components within every solar system. Essentially, inverters safely convert direct current (DC) to alternating current (AC), enabling users to turn sunlight into practical energy.

Most importantly for SEDG investors, the company has been successful converting recent dynamics associated with the new normal into paying customers. While other industries struggled for traction, SolarEdge managed to ring up $1.46 billion in revenue in 2020, a little more than 2% above the prior year’s result. Again, the upside performance demonstrates the fundamental demand bolstering solar stocks.

Moreover, at the conclusion of 2021, SolarEdge hit $1.96 billion in the top line, reflecting nearly 35% year-over-year growth. Clearly, Wall Street likes what it sees, with SEDG stock up 15% year-to-date.

Enphase Energy (ENPH)

Rather than a pure-play idea among solar stocks, Enphase Energy (NASDAQ:ENPH) is primarily a software-driven home energy solutions provider. Its business encompasses solar generation and web-based monitoring and control. However, its home energy storage system is what will likely draw eyeballs to the company.

Although the idea of extracting usable power from naturally recurring dynamics — basically energy for “free” — has always appealed to homeowners, setting up a solar system is only half the battle. Since renewable sources largely tend to be intermittent, to holistically benefit from green solutions requires battery storage systems. This is of course where Enphase enters front and center stage.

By leveraging an energy bank, Enphase users can store usable power for a rainy day. With blackouts likely to be a common fixture in the years ahead due to the time necessary to upgrade our electrical grid, ENPH should rise in relevance.

Canadian Solar (CSIQ)

Specializing in photovoltaic (PV) modules, Canadian Solar (NASDAQ:CSIQ) serves the entire spectrum of the renewable energy complex, from utilities to commercial systems to residential solutions. Therefore, CSIQ should enjoy significant (albeit cynical) benefits from the current geopolitical crisis. With more countries alarmed about energy security, CSIQ belongs on your radar of solar stocks to buy.

Mainly, the challenge with hydrocarbon-based fuel extraction is that, while they may lever tremendous energy density, they’re often sourced from nations with stability challenges, to put it diplomatically. As the Russian invasion of Ukraine proved, all it takes is one ill-advised move by a person in power and the entire global order could come unglued.

But the potential beauty of solar stocks is that even under such ungluing, the underlying systems can still provide usable power. Therefore, CSIQ should attract more attention now that people are waking up to a rather dark paradigm.

Daqo New Energy (DQ)

Based in China, Daqo New Energy (NYSE:DQ) manufactures monocrystalline silicon and polysilicon, which are primarily used in solar PV systems. Given the importance of these critical components, DQ has garnered significant near-term demand, gaining over 10% YTD.

While that might seem like you’re buying into near-term momentum, the reality is that DQ is still on a relatively steep discount. Over the trailing year, shares are down more than 34%. Granted, such a dark shade of crimson reflects substantial risk. However, Daqo shares appear to have hit a bottom earlier this year and are in the process of “rounding out” to an upside rally.

If so, you’re going to want to pay close attention to DQ as one of the solar stocks to buy. In 2021, preliminary data shows that Daqo generated $1.68 billion in top-line sales, up almost 2.5X from 2020’s result (which itself was substantially higher from the prior year’s tally).

In other words, both technical and fundamental momentum is strong with Daqo New Energy.

First Solar (FSLR)

A solar panel manufacturer, First Solar (NASDAQ:FSLR) should benefit from an already positive attitude toward renewable solutions becoming even more robust. According to a report from the Pew Research Center in late 2019, 96% of surveyed homeowners who either installed PV panels or have seriously considered them cited saving money on utility bills as a key motivating factor for going solar.

Well, that was before Covid-19. Since the pandemic struck, both the federal government and our elected public officials provided unprecedented aid to the American people. However, there’s no such thing as a free lunch — especially if it came from the government. Unfortunately, the money stock blew up, sparking a worrying inflation that may be difficult for the Federal Reserve to address.

Put another way, it’s likely that over this year — and perhaps in future years — energy prices will go up. If so, solar stocks make perfect sense, driving much higher interest for FSLR and its ilk.

SunPower (SPWR)

Given its acumen in installing solar power products for home and commercial use, SunPower (NASDAQ:SPWR) may play a crucial role in the broader integration of renewable energy systems. For one thing, the massive pivot to homeownership — particularly as buyers ought to take advantage of record low interest rates — represents a natural lift to SPWR stock. Obviously, owning your property gives you greater leeway as to what you want to do with it.

In addition, many millennials are moving from overpriced urban neighborhoods in the western and eastern coastlines and heading toward the suburbs in more affordable states. That would likely translate to bigger homes, which in turn facilitates more reliable business opportunities for SunPower.

Although arguably most people want solar energy solutions, not everybody qualifies. For instance, if your roof is too small, solar panels may not generate enough kilowatt-hours to make economic sense. Therefore, the migration to affordably priced suburbs could be a huge deal for SPWR and similar solar stocks down the line.

Sunnova (NOVA)

A leading national residential solar company, Sunnova (NYSE:NOVA) may become an important cog in the broader renewable energy equation. As mentioned earlier, the rush to secure real estate bodes well for Sunnova and other solar stocks as this dynamic points to a larger total addressable market.

In addition, consumers aren’t just concerned about utility bills. Increasingly, as retaliatory sanctions involving the geopolitical flashpoint in eastern Europe led to crimped global supplies of crude oil, the price of gasoline skyrocketed. Fortunately, one solution is to pivot to electric vehicles.

Revenue growth for Sunnova reflects the company’s rising potential to advantage present circumstances, with 2021 sales of $241.8 million up 50% year-over-year. Still, you should note that Sunnova is riskier than other solar stocks, featuring a net loss in 2021 of $138 million and a YTD loss in the market of 10%.

ReneSola (SOL)

One of the higher-risk, higher-reward plays among solar stocks, ReneSola (NYSE:SOL) provides investors exposure to both power generation projects and energy storage solutions. While SOL is a cynical beneficiary of current geopolitical dynamics, it’s important to realize that even without the armed conflict, the devastating impact of climate change has been itself a wake-up call to many.

On that fundamental basis, ReneSola could attract demand, possibly helping drive SOL stock higher. But here’s the problem. Based on preliminary data, the company generated just under $80 million in revenue last year. But for context, in 2019, ReneSola hit $119 million in the top line. Not counting the negative impact in 2020, sales haven’t been this low for the business since 2016.

To be fair, the bottom line is decent, with the company posting net income of nearly $7 million in 2021. It’s also possible that SOL hit a bottom in late January of this year, with shares appearing to round out to the upside. But whether that happens or not is very debatable.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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