Solar energy stocks are an increasingly popular investment choice as the world transitions to cleaner, renewable energy sources. With the Paris Agreement and many countries’ net-zero emissions targets, the solar industry is poised for significant growth.
Key Takeaways:
- First Solar Inc. (FSLR): Leading thin-film technology for utility-scale solar projects.
- Enphase Energy Inc. (ENPH): Innovative microinverters and integrated energy solutions for homes.
- Sunrun Inc. (RUN): Largest US residential solar installer with a service-based model.
- Brookfield Renewable (BEP): Diversified global renewable portfolio with growing solar assets.
- SolarEdge Technologies (SEDG): Power optimization technology for residential and commercial solar.
Overview: The Rise of Solar Energy
Solar energy is harnessed from sunlight and converted into electricity using photovoltaic (PV) cells or concentrated solar power (CSP). PV technology, the more widely used method, directly converts sunlight into electricity, while CSP uses mirrors or lenses to concentrate sunlight, heating a fluid and producing energy.
The global shift towards renewable energy sources has been a significant driver for the solar industry’s growth. Governments and businesses are increasingly recognizing the environmental and economic benefits of solar power, which has led to substantial investments and policy support.
| Key Benefits of Solar Energy | Description |
|---|---|
| Environmental Impact | Solar power is a clean, renewable energy source that reduces reliance on fossil fuels, helping to mitigate climate change. |
| Abundance and Accessibility | Sunlight is an infinite resource, and solar technology is becoming increasingly efficient and affordable, making it accessible to a wider range of users. |
| Energy Security | Solar energy reduces dependence on finite resources like oil and gas, enhancing energy security and reducing vulnerability to price volatility. |
| Job Creation | The solar industry is creating new jobs, contributing to economic growth and community development. |
| Grid Resilience | Solar power can be distributed, reducing the strain on centralized grids and improving resilience during power outages. |
Solar Energy Market Growth:
- The global solar power market was valued at approximately $253.69 billion in 2023 and is projected to reach $436.36 billion by 2032, growing at a compound annual growth rate (CAGR) of 6% during this period. fortunebusinessinsights
- The solar energy market was valued at $94.6 billion in 2022, will grow to $300.3 billion by 2032, reflecting a much higher CAGR of 12.3%. alliedmarketresearch
- The solar energy systems market is also on an upward trajectory, expected to grow from $160.3 billion in 2021 to $607.8 billion by 2030, with a CAGR of 15.7%. grandviewresearch
Performance Comparison of Top Solar Energy Stocks
| Company | 1-Year Return | Key Solar Energy Stocks Applications |
|---|---|---|
| First Solar, Inc. (FSLR) | +15.0% | Utility-scale solar power plants, Thin-film PV module technology, Grid-connected solar solutions |
| Enphase Energy, Inc. (ENPH) | -50.1% | Microinverter technology, Energy management solutions, Storage systems |
| Sunrun Inc. (RUN) | -18.3% | Residential solar solutions, Energy storage systems, Solar-as-a-Service (SaaS) |
| Brookfield Renewable (BEP) | +9.0% | Utility-scale solar projects, Distributed solar solutions, Renewable energy project development and financing |
| SolarEdge Technologies (SEDG) | -67.0% | Intelligent inverter solutions, Energy storage systems, Module-level power optimization |
The 5 Best Solar Energy Stocks to Watch
The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q2 2024 report.
1. First Solar, Inc. (FSLR)
Number of Hedge Fund Holders (Q2 2024): 65
First Solar, Inc., founded in 1999 and based in Tempe, Arizona, is a leading American solar technology company. With around 6,700 employees, it specializes in designing, manufacturing, and selling solar PV modules using cadmium telluride technology.
The company recently introduced its Series 6 Plus and Series 7 TR1 solar modules, achieving the world’s first EPEAT Climate+ designation. In May 2024, First Solar secured a substantial contract with MN8 Energy LLC for 457 MW of advanced thin film solar modules.
As the only major U.S.-headquartered solar manufacturer without production in China, First Solar holds a unique position in the global market. This strategic advantage allows it to effectively serve regions such as Asia Pacific, Europe, the Middle East, Africa, and North America.
According to insidermonkey, Citadel Investment Group, led by Ken Griffin, has a PUT position on First Solar (FSLR) worth $766.56 million, involving 3.4 million shares.
First Solar’s second quarter 2024 results showed promising growth, with net sales reaching $1.0 billion, a $0.2 billion increase from the previous quarter. This boost was attributed to higher module sales volume and improved average selling prices. The company reported a net income per diluted share of $3.25, up from $2.20 in Q1 2024.
Despite a slight decrease in cash reserves to $1.2 billion, First Solar maintained a strong financial position. The reduction was primarily due to capital expenditures for new U.S. factories and loan repayments in India, partially offset by increased operating cash flows from the modules business.
CEO Mark Widmar expressed satisfaction with the company’s performance, highlighting their balanced approach to growth, profitability, and liquidity. He emphasized First Solar’s commitment to delivering value through technological advancements and a unique business model, benefiting both customers and shareholders.
According to Wall Street Analyst on FSLR stock. Of the 39 analysts following the stock, 24 give it a Buy and 8 has it at Hold.
Why We Picked First Solar, Inc.:
First Solar stands out for its technology leadership in the solar industry. The company’s advanced thin-film PV modules offer superior performance and a lower carbon footprint. With a strong focus on R&D, First Solar is committed to driving innovation, enhancing its competitive advantage. Additionally, its vertical integration strategy ensures better cost management and supply chain control. First Solar’s solid financial performance and robust order book give it a strong foundation for future growth.
2. Enphase Energy, Inc. (ENPH)
Number of Hedge Fund Holders (Q2 2024): 42
Enphase Energy, a pioneer in home solar solutions, specializes in creating advanced microinverters and energy storage systems. The company’s innovative products are designed to maximize the efficiency of solar photovoltaic installations, offering homeowners greater control over their energy production and consumption.
Recently, Enphase expanded its reach by introducing new home energy systems in Luxembourg, featuring the IQ Battery 5P and IQ8 Microinverters. These offerings are complemented by the company’s Enlighten software, which empowers users to monitor and optimize their solar PV systems through detailed performance analysis.
According to insidermonkey, Citadel Investment Group, led by Ken Griffin, has a significant stake in Enphase Energy (ENPH). Their position includes 1.42 million shares, valued at approximately $141.7 million.
Enphase Energy’s Q2 2024 results show strong growth, with total revenue reaching $303.5 million, up from $263.3 million in Q1. U.S. revenue increased by 32%, while European revenue remained stable. The company’s non-GAAP gross margin improved to 47.1%, and operating income rose to $61.1 million.
Battery shipments surged to 120.2 megawatt hours, nearly doubling from Q1. The company expanded its certified installer network and introduced new products, including the IQ Battery 5P and IQ8 Commercial Microinverters. Enphase also entered new markets, such as Finland, and launched innovative solutions like the CS-100 EV Charger.
Benefiting from the Inflation Reduction Act, Enphase ramped up U.S. manufacturing, shipping approximately 574,000 microinverters eligible for tax credits. The company maintains a strong financial position with $1.65 billion in cash and equivalents, while continuing share repurchases and investments in research and development.
According to Wall Street Analyst on ENPH stock. Of the 43 analysts following the stock, 21 give it a Buy, 16 has it at Hold and 2 calls it a Sell.
Why We Picked Enphase Energy, Inc.:
Enphase Energy has revolutionized the solar energy space with its microinverter technology, which optimizes energy production at the panel level. The company’s comprehensive energy management solutions and integrated storage systems provide advanced monitoring, control, and energy independence. Enphase’s strong brand presence and extensive network of installers and distributors have contributed to its stellar stock performance, outpacing its peers in the industry.
3. Sunrun Inc. (RUN)
Number of Hedge Fund Holders (Q2 2024): 35
Sunrun Inc. is a leading residential solar and energy storage company in the U.S. It offers a range of solar energy plans and products to homeowners, making solar adoption more accessible and affordable.
According to insidermonkey, Orbis Investment Management, led by William B. Gray, holds 13.9 million shares of Sunrun Inc. (RUN), valued at $164.8 million.
Sunrun’s Q2 2024 results showcase significant growth in storage attachment rates, reaching 54% with 264.5 MWh installed. The company expanded its customer base to 984,000, a 13% increase year-over-year. Sunrun also made strategic hires to boost its new homes division and partnered with Tesla Electric to support the Texas power grid.
Financial performance remained strong, with Annual Recurring Revenue from Subscribers hitting $1.5 billion. The company generated $217 million in cash and reported Net Earning Assets of $5.7 billion. Sunrun’s commitment to sustainability was evident as it received approval from the Science Based Targets Initiative for its emissions reduction goals.
Operationally, Sunrun installed 192.3 MW of solar energy capacity and expanded its Networked Solar Energy Capacity to 7,058 MW. The company’s systems are projected to offset 3.8 million metric tons of CO2 over the next 30 years, underscoring its significant environmental impact.
According to Wall Street Analyst on RUN stock. Of the 30 analysts following the stock, 18 give it a Buy, 9 has it at Hold and 1 calls it a Sell.
Why We Picked Sunrun Inc.:
Sunrun is a leader in the residential solar market, making solar energy more accessible and affordable for homeowners. Its unique Solar-as-a-Service (SaaS) model allows customers to adopt solar without upfront costs. Sunrun’s focus on innovation, strong market presence, and strategic partnerships, such as with Ford Motor Company, position it for continued growth. The company’s commitment to customer satisfaction is evident through its high NPS scores.
4. Brookfield Renewable (BEP)
Number of Hedge Fund Holders (Q2 2024): 5
Brookfield Renewable is a global leader in renewable power, with a significant presence in the solar energy sector. The company owns and operates a diverse portfolio of renewable power assets, including hydroelectric, wind, solar, and energy storage facilities.
According to insidermonkey, Select Equity Group, led by Robert Joseph Caruso, holds 4.98 million shares of Brookfield Renewable (BEP), valued at $123.3 million.
Brookfield Renewable reported robust Q2 2024 results, deploying $8.6 billion in capital globally and securing contracts for an additional 2,700 GWh of annual generation. The company commissioned 1,400 MW of new renewable capacity and expects to bring 7,000 MW online this year. Strategic asset sales generated over $400 million in proceeds, with initiatives underway to raise approximately $3 billion.
The company expanded its global presence by acquiring a majority stake in Neoen, a leading renewable platform with significant assets in France, Australia, and the Nordics. Brookfield also entered the South Korean market and strengthened its position in India, enhancing its ability to serve large corporate customers worldwide.
Brookfield Renewable’s financial performance remained strong, with Funds From Operations (FFO) reaching $339 million, a 9% year-over-year increase. The company’s diverse portfolio, including hydroelectric, wind, solar, and energy storage assets, contributed to this growth. Brookfield continues to focus on battery storage solutions and aims to achieve its 10%+ FFO per unit growth target for the year.
According to Wall Street Analyst on BEP stock. Of the 14 analysts following the stock, 8 give it a Buy, 5 has it at Hold and 1 calls it a Sell.
Why We Picked Brookfield Renewable:
Brookfield Renewable offers investors a diversified renewable energy portfolio, providing exposure to solar energy alongside other renewable sources like wind and hydro. The company’s global presence and expertise in developing and acquiring renewable energy assets ensure a balanced and stable source of cash flows. Brookfield’s solid financial footing and consistent performance make it a reliable investment choice in the solar energy sector.
5. SolarEdge Technologies (SEDG)
Number of Hedge Fund Holders (Q2 2024): 24
SolarEdge Technologies is a leading global provider of intelligent inverter solutions for the solar energy industry. The company’s products aim to increase energy production, improve efficiency, and provide advanced monitoring and control capabilities.
According to insidermonkey, Citadel Investment Group, led by Ken Griffin, holds 1.95 million shares of SolarEdge Technologies (SEDG), valued at $49.1 million.
SolarEdge Technologies reported Q2 2024 revenues of $265.4 million, a 30% increase from the previous quarter but a 73% decrease year-over-year. The solar segment contributed $241.2 million, showing a 27% quarter-over-quarter growth. Despite the revenue increase, the company faced challenges with a negative GAAP gross margin of 4.1% and a non-GAAP gross margin of 0.2%.
The company experienced significant losses, with a GAAP net loss of $130.8 million and a non-GAAP net loss of $101.2 million. Operating expenses remained relatively stable at $149.2 million GAAP and $114.8 million non-GAAP. SolarEdge shipped 873 Megawatts (AC) of inverters and 128 MWh of batteries for PV applications during the quarter.
Despite current challenges, CEO Zvi Lando expressed optimism about the company’s underlying business momentum. SolarEdge expects continued undershipping in Q3 but anticipates a return to higher revenue levels by early 2025 as inventories clear. The company’s cash position stood at $165.3 million net of debt as of June 30, 2024.
According to Wall Street Analyst on SEDG stock. Of the 35 analysts following the stock, 5 give it a Buy, 26 has it at Hold and 3 calls it a Sell.
Why We Picked SolarEdge Technologies:
SolarEdge has established itself as a technology leader, providing intelligent inverter solutions that improve energy production and efficiency. The company’s comprehensive product ecosystem, including inverters, optimizers, and storage solutions, offers a seamless experience to customers. SolarEdge’s strong market position, broad customer base, and continuous innovation drive its high growth trajectory, making it an attractive investment opportunity.
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Conclusion
As we look towards 2024 and beyond, the solar energy sector continues to shine as a beacon of opportunity for investors seeking exposure to the renewable energy revolution. The five companies we’ve highlighted – First Solar, Enphase Energy, Sunrun, Brookfield Renewable, and SolarEdge Technologies – each bring unique strengths and strategies to the table, positioning them as potential leaders in this dynamic industry.
FAQs
1. Why invest in solar energy stocks?
The solar energy industry is poised for significant growth due to the increasing global demand for clean and renewable energy sources. Investing in solar energy stocks offers the potential for attractive returns while supporting the transition to a more sustainable future.
2. What are the key benefits of solar energy?
Solar energy offers numerous advantages, including reducing our reliance on finite fossil fuels, mitigating climate change, providing abundant and accessible energy, creating jobs, and enhancing grid resilience through distributed energy generation.
3. How do I choose the right solar energy stocks for my portfolio?
When selecting solar energy stocks, consider factors such as a company’s financial health, growth prospects, market position, and competitive advantages. Assess their technology, brand strength, and ability to innovate. Diversifying your portfolio with a mix of established and emerging companies in the solar industry can also be a prudent strategy.
4. Are there any risks associated with investing in solar energy stocks?
As with any investment, there are risks to consider. Policy changes, technological disruptions, supply chain issues, and economic downturns can impact the solar industry. Conduct thorough research, stay informed about market dynamics, and ensure your portfolio is appropriately diversified to manage these risks effectively.
5. What are the key growth drivers for the solar energy industry?
The primary growth drivers for the solar energy industry include favorable government policies and incentives, technological advancements that improve efficiency and reduce costs, increasing consumer awareness and demand for clean energy, and the declining cost of solar power generation, making it more competitive with traditional energy sources.
