Shine Bright Like a Diamond: 3 Solar Stocks Poised for 10x Gains by 2025
It was all doom and gloom for solar stocks in 2023. Rising interest rates had the biggest, most negative impact on the industry. After all, when rates are high, it becomes far more expensive for solar companies to finance projects, which can also cut into margins. Coupled with higher labor costs and regulatory changes, we can see why the industry took a hit. However, with a good chunk of negativity priced in, it may be time to start looking at top solar stocks to buy.
Not helping, though, California instituted its net energy metering 3.0. The new tariff regime cuts compensation rates for new solar customers by 75%. If the customers add energy storage, however, the economic proposition for a solar installation becomes more favorable.
The good news is most of the negativity from California has also been priced into solar stocks. Better, we’re just now starting to see improving earnings. First Solar (NASDAQ:FSLR), for example, just posted higher quarterly revenue and profits and expects full-year earnings to nearly double from the year-ago period.
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Should interest rates come down, as hoped, solar names could see sunnier days ahead. That’s why investors should check out these three hot solar stocks to buy.
Sunrun (RUN)
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Let’s start with Sunrun (NASDAQ:RUN). Over the last few days, the stock fell from about $18 to just under $12, where it caught support. It’s also over-extended on RSI, MACD, and Williams’ %R. From its current price of $11.96, I’d initially like to see it refill its bearish gap around $15.41.
Helping, analysts at Jefferies say RUN could double as the company shifts to solar energy storage. In fact, analyst Dushyant Ailani now has a buy rating on RUN, with a price target of $31.
He believes the company “is the leading clean energy provider with a 60% residential market share for new subscriptions,” as noted by CNBC. “Sunrun’s transition from a solar only company to one that also provides battery storage should act as a catalyst that will increase the net value of its subscribers.”
Goldman Sachs also has a buy rating on RUN. Even Bank of America, which tagged it with a buy rating and a price target of $21 a share.
SolarEdge (SEDG)
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Another one of the top solar stocks to buy is SolarEdge (NASDAQ:SEDG), a $3.88 billion solar and energy storage company now trading at $67 a share.
Granted, the company just reported a 65% decline in sales year over year. It also just posted a loss of $2.85 a share, reversing a year-ago profit. However, not only has that negativity been priced in, TD Cowen analysts are bullish. In fact, the firm maintained an outperform rating on the SEDG stock, with a new price target of $100 a share.
Even better, according to SEDG CEO, “We believe we are well positioned for the next growth cycle in our industry due to our expanding product portfolio as well as the operational and cost reduction measures we have taken.”
Plus, company director Avery More just bought 7,000 shares of SEDG for $67.75 per share for $474,250. Before this buy, More bought $1.09 million worth of shares in 2023.
Global X Solar ETF (RAYS)
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We can also look at the Global X Solar ETF (NASDAQ:RAYS), which allows us to diversify with 50 solar holdings for about $11.65 a share at the moment.
With an expense ratio of 0.51%, the ETF invests in companies involved with solar power production, solar-powered generators, engines, and batteries. Some of its top holdings include Enphase Energy NASDAQ:ENPH), First Solar, SolarEdge, and Sunrun to name a few.
After plummeting from about $26 to a low of $10.51, the ETF is slowly starting to pivot higher. Better, along with the broader industry, the ETF appears to have priced in a good deal of negativity. From its last traded price of $11.66, I’d like to see it test $19 again near term.
Remember, ETFs are always a great addition to your portfolio. Not only do they allow you to diversify with leading stocks, but they also allow you to do so at a low cost.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
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