USA Energy News: Top Solar Stocks for Q2 2023
Original Source: By NATHAN REIFF
Top-performing solar stocks—including Enlight Renewable Energy Ltd., First Solar Inc., and Maxeon Solar Technologies Ltd.—have posted significant gains over the past year amid several quarters of record residential solar installations and the Inflation Reduction Act of August 2022, which provides tax incentives and other benefits to further accelerate the growth of renewable energy infrastructure.
Select solar stocks surged while the benchmark Invesco Solar ETF (TAN) has fallen 1% over the last 12 months, outshining the Russell 1000 Index’s 9% decline.
Here are the top three solar stocks with the best value, the fastest growth, and the most momentum. All company data are as of April 5, while benchmark data are as of April 7.
These are the solar stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
|Best Value Solar Stocks|
|Price ($)||Market Capitalization (Market Cap) ($B)||12-Month Trailing P/E Ratio|
|Daqo New Energy Corp. (DQ)||44.00||3.3||1.8|
|Brookfield Renewable Corp. (BEPC)||33.84||5.8||3.9|
|Canadian Solar Inc. (CSIQ)||38.32||2.5||11.1|
- Daqo New Energy Corp.: Daqo is a Chinese solar energy company that manufactures polysilicon for sale to manufacturers of solar cells and modules. The company also builds photovoltaic wafers.
- Brookfield Renewable Energy Corp.: Brookfield Renewable owns a portfolio of hydroelectric, wind, solar, and energy storage facilities across multiple continents, making it one of the world’s biggest publicly traded pure-play renewable energy companies. In late March, Brookfield announced that it will participate in a consortium to purchase Australian integrated power generator Origin Energy Ltd. for an enterprise value of $18.7 billion.
- Canadian Solar Inc.: Canadian Solar designs, builds, and sells solar equipment for residential, commercial, and industrial customers. The company’s products include solar modules, inverters, and system kits. Net income more than doubled and revenue climbed by 29% year-over-year for the final quarter of 2022, driven in part by a significant increase in solar module shipments.
These are the top solar stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
|Fastest Growing Solar Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Altus Power Inc. (AMPS)||5.07||0.8||600.0||24.0|
|Brookfield Renewable Corp. (BEPC)||33.84||5.8||633.0||5.6|
|Daqo New Energy Corp. (DQ)||44.00||3.3||156.0||118.5|
- Altus Power Inc.: Altus is a commercial-scale clean electrification company providing solar generation, energy storage, and charging infrastructure nationwide. Net income attributable to the company rose by over 800% to $67.9 million for the most recent quarter reported. Net income growth was due in part to a $71.5 million non-cash gain from the remeasurement of warrants and alignment shares.
- Brookfield Renewable Corp.: See company description above.
- Daqo New Energy Corp.: See company description above.
These are the solar stocks that had the highest total return over the past 12 months.
|Solar Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Enlight Renewable Energy Ltd. (ENLT)||16.47||1.7||740.3|
|First Solar Inc. (FSLR)||201.61||21.5||151.0|
|Maxeon Solar Technologies Ltd. (MAXN)||27.96||1.3||100.1|
|Russell 1000 Index||N/A||N/A||-9.4|
|Invesco Solar ETF (TAN)||N/A||N/A||-1.2|
- Enlight Renewable Energy Ltd.: Enlight is a developer and owner of solar, wind, and energy storage projects in the U.S., Europe, and Israel. For the fourth quarter of 2022, Enlight reported record revenue of $61 million, a 74% increase from the prior year due mainly to growth in its Isreal and Western Europe business.
- First Solar Inc.: First Solar designs and manufactures photovoltaic solar power systems and solar modules, serving customers around the world. Global renewable energy firm EDP Renewables finalized an order in March for 1.8 gigawatts of First Solar advanced thin-film photovoltaic modules, to be delivered through 2028. Financial terms of the deal were not disclosed.
- Maxeon Solar Technologies Ltd.: Maxeon is a Singaporean solar company building and distributing a variety of solar energy components globally.
The Impact of the Inflation Reduction Act on Solar Stocks
The Inflation Reduction Act, signed into law by President Biden in August 2022, has had a significant impact on solar stocks. The law provides tax credits and rebates to incentivize Americans to use clean energy, including solar energy. The White House says that 7.5 million additional families will be able to install solar technology on their roofs with a 30% tax credit as a result of the law. Solar stocks posted significant gains following the law’s passage as demand for solar products increased.
Advantages of Investing in Solar Stocks
Two significant advantages of investing in solar stocks include the overall growth of the energy industry and the rapid growth in demand for alternative energy sources.
Market Size: The International Energy Agency (IEA) estimates that global energy investment rose 8% in 2022, reaching a total of $2.4 trillion, which is above the levels seen before the COVID-19 pandemic. Solar output increased 22% to 1,003 terawatt-hours (TWh) in 2021, a record increase in terms of output. Still, IEA researchers estimate output needs to increase sevenfold by 2030—or 25% annually—for the world to achieve net zero emissions by 2050.
Growth of Alternative Energy: The IEA expects policies in major economies to help boost annual investments in alternative energy to $2 trillion by 2030, representing an increase of more than 50% from current levels.
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