Solar Energy Stocks: 7 Clean Energy Companies Poised for Huge Growth
The transition away from fossil fuels to clean energy sources is already well underway. In fact, the International Energy Agency (IEA) estimates that renewable energy will outpace coal as the largest source of electricity by 2025.
And solar power will help lead this transformation in the energy sector. In 2020 the amount of solar capacity investments jumped by 12%—even during the global pandemic—and reached nearly $149 billion worldwide.
That included a $1.1 billion investment in the largest solar park ever, a 2 gigawatt (GW) park in the United Arab Emirates.
And there’s no indication that solar energy investments will slow down any time soon. President Biden included a 10-year extension for solar and energy storage investment tax credits as part of his $2 trillion infrastructure package. And the research firm IHS Markit estimates that solar energy installations will grow by more than 30% in 2021.
Solar Energy Stats Investors Need to Know
If you’re still a little skeptical that solar energy stocks are a good long-term bet, consider these statistics from the Solar Energy Industries Association:
- Solar energy growth over the past decade has had an annual growth rate of 42%
- More than 100 GW of solar power has been installed in the United States, powering more than 18 million homes
- More than 230,000 Americans work at 10,000 solar companies
- The cost to install solar has dropped more than 70% over the past 10 years
- 43% of all new electric capacity added to the grid in 2020 came from solar
- Solar made up just 0.1% of energy capacity in the United States in 2010 but now makes up 3%
- Over the next 10 years, 324 GW of solar photovoltaics (solar panels) will be installed in the United States, up 3X of the amount installed through 2020
7 Top Solar Energy Stocks
- First Solar, Inc.
- Enphase Energy
- SunPower Corporation
- Brookfield Renewable Partners
- SolarEdge Technologies, Inc.
- NextEra Energy, Inc.
- JinkoSolar Holding Co.
First Solar, Inc. (Nasdaq: FSLR)
First Solar has big plans for the solar modules market and is already making huge strides. The company’s thin-film technology has helped First Solar develop some of the most advanced solar panels on the market, which work better in hot and humid climates than its competitors’ products.
And unlike many companies in the solar industry, First Solar is in very good financial shape right now—with little debt and lots of cash. The company has about $1.5 billion in cash right now and just $453 million in debt.
Unsurprisingly, 2020 was a difficult year for First Solar—and the entire solar industry—but as demand has begun to come back this year, investors should remember that the company has made strides to improve its gross profit margins, which have jumped from about 10% in mid-2019 to nearly 26% now.
And First Solar is planning for future growth as the company just opened up a new production factory in Malaysia that will help the company increase its capacity.
Even with the company’s share price taking a hit in 2020 due to a slowdown in its business because of the pandemic, First Solar’s share price gains of 70% are still outpacing the S&P 500’s gains over the past three years.
Enphase Energy (Nasdaq: ENPH)
If Enphase Energy isn’t on your radar, then let me introduce you to one of the best-performing solar energy stocks of the past few years.
Enphase is an energy management company and the leader in the microinverter-based solar-plus-storage systems (essentially solar-powered systems for homes). The company boasts more than 34 million microinverters installed in more than 1.4 million homes.
As Enphase has grown, its share price has soared more than 2,500% over the past three years! And the company is positioning itself for more growth in the coming years.
Enphase’s chief financial officer, Eric Branderiz, said at the end of 2020 that the company is going to be “very active” in acquiring companies that will complement its digital platform.
SunPower Corporation (Nasdaq: SPWR)
SunPower makes solar-powered electricity solutions for residential and commercial needs through solar panels and energy storage. The company has some big names that have trusted SunPower to help them achieve their green energy goals, including Toyota (TM), Lowe’s (LOW), and Walmart (WMT).
The company’s higher-margin business—like energy storage—looks particularly promising, especially as demand for home solar units increases. The company said residential installations have 24% margins and that they added 13,000 new residential customers in the last quarter of 2020.
The company is confident that its higher-margin business growth will continue in the coming years and estimates that EBITDA will triple in 2021 and grow at more than 40% in 2022.
SunPower’s stock has been a huge success on Wall Street over the past three years, skyrocketing an astonishing 504%—up nearly 8X more than the S&P 500’s returns!
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Brookfield Renewable Partners (NYSE: BEP) (BEPC)
Brookfield Renewable Partners isn’t a solar pure play, but the company is such a large player in the renewable energy industry that it deserves a spot on this list.
The company makes most of its revenue from its hydro energy solutions, but it has increasingly focused more of its attention on solar. For example, Brookfield recently began constructing a massive 1.2 GW solar park in Brazil, one of the largest in the world, which it will use to sell power to commercial customers and utilities.
The company’s size has helped it grow quickly in the solar industry as well, including a merger with TerraForm Power in 2020. The deal added a 5,000-megawatt portfolio of wind and solar assets to Brookfield.
The company’s diversified renewable energy assets make it a solid opportunity for investors who don’t want to be tied to just one area of the renewable industry. And with the company’s share price more than doubling the broader market’s returns over the past three years, there’s a lot for investors to like with Brookfield.
SolarEdge Technologies, Inc. (Nasdaq: SEDG)
SolarEdge is best known for its direct-current-optimized inverters, which are used to increase the electricity output of photovoltaic solar panels. These inverters are an important part of making solar power as efficiently as possible, and as the solar market has grown, so has SolarEdge’s business.
Despite the pandemic, the company was actually able to increase revenue to a new company record last year. Revenue from the company’s solar products brings in 93% of the company’s total sales right now, but SolarEdge is looking beyond the traditional solar market for new growth as well.
The company’s e-Mobility division is making the batteries and the powertrain for Fiat’s e-Ducato electric vehicle. SolarEdge has already delivered some of the testing equipment to Fiat and the company expects that its e-Mobility business could bring in $100 million to $120 million of revenue in 2021.
Additionally, the company purchased an energy storage company called Kokam in 2018 and continues to expand its operations. The company is building a new battery factory in Korea that will manufacture lithium-ion cells, with the factory set to open in 2022.
Kokam’s revenue jumped 25% in 2020 and became profitable for the first time in several years. The company’s management views Kokam as a big part of SolarEdge’s non-solar growth in the coming years.
SolarEdge is gaining a lot of investor attention as it grows, which has led to its stock skyrocketing 415% over the past three years.
NextEra Energy, Inc. (NYSE: NEE)
NextEra isn’t a pure solar energy play, but investors should put this stock on their radar nonetheless because of its significant investments in solar power.
The company is building one of the world’s largest solar-powered battery systems to replace some of the power currently generated by natural gas. The company said that it brought more than 1,100 megawatts of cost-effective solar into service in 2020—and it plans to bring about 10,000 megawatts of total solar capacity to Florida over the next 10 years.
NextEra says that it’s already the largest generator of renewable energy from wind and solar, and its latest solar projects should help the company expand its lead even further.
Over the past three years, NextEra has outpaced the broader market’s gains, jumping 76% compared to the S&P 500’s 59% gains. And income investors will be happy to know that NextEra pays a dividend of about 2%.
JinkoSolar Holding Co. (NYSE: JKS)
JinkoSolar is the largest solar panel manufacturer in the world. The company is based in China, but it sells its products to residential and commercial customers in more than 80 countries around the world.
The company’s dominant position as a solar product manufacturer helped the company thrive in 2020 while many other solar companies were reeling because of the pandemic. Annual shipments of the company’s products jumped 31% in 2020 and revenue spiked 18%.
Management said that despite the difficult market conditions, JinkoSolar’s global market share increased and its gross profit popped by about 14%.
JinkoSolar’s stock has exploded over the past three years as its share price has climbed more than 342%! For investors looking for a clear leader in the solar products category—and with worldwide exposure to the solar energy market—JinkoSolar is a no-brainer.
Solar Energy ETFs: Invest In a Group of Solar Stocks All at Once
If you don’t want to select a specific stock to buy in the solar energy industry, but you still want to invest in solar stocks, then an exchange-traded fund (ETF) may be your best choice.
An ETF allows you to invest in a basket of stocks all at once so that you can have exposure to an industry without having to select individual stocks.
Solar energy investors are in luck because the Invesco Solar ETF (TAN) has solidly outpaced the S&P 500 over the past few years. This ETF follows the MAC Global Solar Energy Index and invests at least 90% of its total assets in the stocks that make up that index.
And with solar stocks leading the clean energy and renewable energy revolution, the Invesco Solar ETF has gained more than 4X the returns of the broader market over the past three years!
Frequently Asked Questions
What are the best solar stocks?
All of the companies on this list are a great place for solar energy investors to start, but the two best-performing solar stocks on this list are Enphase Energy and SunPower. Enphase’s stock has soared more than 2,500% over the past three years and SunPower’s stock has gained 504% over the same time period.
Are solar stocks a good investment?
Yes, some solar stocks can be good investments. Investors should look for solar companies that have long-term competitive advantages, solid finances, and good management. One solar stock that has been an especially good investment is Enphase Energy, which has seen its share price rise more than 2,500% over the past three years.
What is the best solar company?
Based on its performance compared to the S&P 500’s returns, Enphase Energy has been one of the best solar companies. Enphase’s stock has gained more than 2,500% over the past three years while the S&P 500 has gained just 58%.