The demand for solar power had been strong before the coronavirus-led lockdowns hit demand for residential installations. However, soaring demand by utilities outweighs decline in rooftop system orders. Thanks to green revolution and carbon-free power, new U.S. solar installations are expected to increase by a third in 2020.
Furthermore, solar stocks have been on an uptrend in the past two years, outperforming fossil fuel stocks. In fact, the International Energy Agency (IEA) reported that renewable electricity generation will grow nearly 5% in 2020 despite supply chain and construction delays caused by the coronavirus crisis.
Solar Installations Expand Amid Pandemic
Solar energy accounted for 40% of new U.S. capacity additions in the first quarter of 2020, ahead of natural gas and wind.
According to the U.S. Solar Industries Association and energy research firm Wood Mackenzie, the country’s solar industry will install 18 GW this year, which is expected to powermore than 3 million homes. Though the forecast declines 9% due to the coronavirus-led construction delays and lower consumer demand, utility-scale solar is on track for a record year.
In fact, the report states that 14.4 GW of new capacity utility-scale solar installations are expected to be made in 2020. The states’ renewable energy targets and the low-cost factor of solar energy strengthen solar energy's robust demand.
Additionally, mandates in solar installation in California have helped cushion the blow from virus-led demand weakening. In fact, California’s Governor Gavin Newsom said that wildfire in the state has increased 60% so far this year from 2019, majority of which is due to power lines sparking fires.
Solar stocks have not only delivered big gains but have also outperformed the S&P 500 index during the virus slump. The Invesco Solar ETF (TAN) has gained 14.4% so far this year against the S&P 500’s decline of 0.7% during the same period. Shares of Enphase Energy, Inc. ENPH and SolarEdge Technologies, Inc. SEDG have added 88.9% and 54.9% year to date and have bounced back more than 50% since stocks bottomed in March.
Why Will Solar Stocks Continue to Rally?
Solar energy plays a crucial role in the green revolution and analysts believe it is still the early days. Solar panels cover just only 6% of the world’s rooftops and accounts for only 1.5% of electricity generated in the United States.
In fact, cost of solarproduced electricity has plunged 90% since 2009 and is even cheaper than fossil fuel. The costs are expected to drop a further 34% by 2022. Additionally, the solar energy industry is expected to be the fastest-growing part of the renewable energy market in the next three decades.
Installation of solar panel is also expected to be the fastest-growing job market in the United States over the next eight years, per the U.S. Bureau of Labor Statistics data.
5 Stocks to Watch Out For
IEA states that despite the coronavirus uncertainty, solar photovoltaic capacity is set to increase the fastest among all renewable energy sources in 2020.Given the positive scenario, we have shortlisted five stocks that belong to the Zacks Solar industry and are expected to return well.
Canadian Solar Inc. CSIQ designs, develops, manufactures, and sells solar ingots, wafers, cells, modules, and other solar power products. The company’s expected earnings growth rate for the current year is 23.8%.
The Zacks Consensus Estimate for its current-year earnings has climbed nearly 30% over the past 60 days. Canadian Solar holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Vivint Solar, Inc. VSLR provides distributed solar energy primarily to residential customers. The company’s expected earnings growth rate for the current quarter is more than 100%. The Zacks Consensus Estimate for its current-year earnings has moved 76.6% up over the past 60 days. Vivint Solar carries a Zacks Rank #3 (Hold).
Sunnova Energy International Inc. NOVA provides residential solar and energy storage services. The company’s expected earnings growth rate for the current quarter is 97%. The Zacks Consensus Estimate for its current-quarter earnings has moved up 14.3% over the past 60 days. Sunnova Energy carries a Zacks Rank #3.
Sunworks, Inc. SUNW provides photovoltaic-based power systems for the agricultural, commercial, industrial, public works, and residential markets. The company’s expected earnings growth rate for the nextquarter is 76.9%. The Zacks Consensus Estimate for its current-quarter earnings has moved up 28.6% over the past 60 days. Sunworks carries a Zacks Rank #3.
Sunrun Inc. RUN engages in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems. The company’s expected earnings growth rate for the currentquarter is more than 100%. The Zacks Consensus Estimate for its current-quarter earnings has climbed more than 100% over the past 90 days. Sunrun carries a Zacks Rank #3.
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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Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
Vivint Solar, Inc. (VSLR) : Free Stock Analysis Report
SolarEdge Technologies, Inc. (SEDG) : Free Stock Analysis Report
Sunrun Inc. (RUN) : Free Stock Analysis Report
Sunworks, Inc. (SUNW) : Free Stock Analysis Report
Sunnova Energy International Inc. (NOVA) : Free Stock Analysis Report
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