While the decision was expected, President Donald Trump’s determination to pull out of the landmark Paris Agreement did send ripples throughout the renewable energy sector. Citing job hindering regulations, Trump has pulled the United States out of the voluntary agreement to lower the planet’s temperature, reduce emissions and ultimately boost the amount of renewable energy generation across the globe.
And how did solar stocks react to Trump’s decision? Drop like a stone, right? Wrong. The various solar stocks actually went up in the days after Trump’s folly.
The reason is simple — a whole host of states, cities and municipalities have decided to take up the Paris Agreement challenge without Trump’s blessing. From New York to Hawaii and even in some Republican-controlled states — have taken up the climate change flag. Meanwhile, across the globe, many nations have pledged to do more in the wake of the U.S.’s absence.
What that means is that the solar stocks could still see plenty of long-term demand for their products. For investors, this means the sun is still shining for the sector.
With that in mind, here are three solar stocks to buy today.
Solar Stocks to Buy: First Solar (FSLR)
When it comes to solar stocks, First Solar, Inc. (NASDAQ:FSLR) is the elephant in the room. These days, however, it’s been acting more like a mouse. That’s because FSLR suffered hard in the wake of a glut of cheap panels and oversupply issues. Those issues have caused shares of First Solar to plunge over the past year or so and report less-than-stellar earnings. And when you add in the Paris Agreement concerns, it only adds to FSLR’s volatility.
But this is one instance when investors should ignore the noise and buy.
That’s because FSLR’s plan to get over the hump is a sound one. The firm is looking at shifting its business model toward being a full solar farm contractor. FSLR will provide not only planning, grid interconnections and permitting services, but also being a complete components supplier. This shifts a lot of the issues it had back into the hands of its end customers rather than First Solar.
And speaking of those customers, more and more of them are coming from overseas. FLSR has recently struck deals in India to provide equipment for the emerging markets solar ambitions. And the firm has expanded heavily into Latin America as well.
Adding in the firm’s strong cash position and low debt, FSLR has the goods to get over this hump and win as the world moves forward with the Paris Agreement.
Solar Stocks to Buy: JinkoSolar (JKS)
While the U.S. takes a step back, China makes two giant leaps forward. Already China has said it would spend more than $360 billion through 2020 on renewable energy projects to reduce its carbon output. Moreover, a huge bulk of that spending will be on adding between 15 to 20 GW worth of new solar generating capacity per year, over the next four years.
This is setting China up to be one of the biggest producers of panels on the planet and Chinese solar stocks some of the greatest winners in the Paris agreement. Top on that list could be JinkoSolar Holding Co., Ltd. (NYSE: JKS).
JKS is a pure play solar panel maker, and it has gigawatts worth of capacity. That’s both a blessing and a curse. On the one hand, it’s able to churn out a ton of panels for pretty cheap. In fact, shipments rose by roughly 30% last quarter. However, it’s panels aren’t super highly efficient and command much lower prices. That big bump in shipments only resulted in about a 9.4% jump in its revenues. But unlike some Chinese solar stocks, JKS is still profitable and can manage its debt load.
This means that JKS can comfortably survive in its niche of being a cheap panel producer for the world. Remember, there are plenty of developing and poorer nations starting their solar journeys. Buying expensive, high-efficiency solar arrays may not be in the cards for these countries — including China’s lofty ambitions.
For investors, JKS could be the best low-cost, commodity panel producer out there.
Solar Stocks to Buy: SunPower (SPWR)
It’s no secret that solar stock leader SunPower Corporation (NASDAQ:SPWR) has suffered under the weight of lower panel prices. But the firm does have some pretty big Ace’s up its sleeves.
For one, it’s backed by one of the world’s largest oil companies — France’s Total SA (ADR) (NYSE:TOT). That ownership relationship provides plenty of benefits — namely a backstop if things get really dicey. Merger reports have continued to put a price floor on shares. Secondly, given that TOT is state-owned by the French government, who do you think is going to get the call when it comes building out France’s solar ambitions?
The second win for SPWR continues to be its high-efficiency panels. While the glut of cheap panels has hurt current prices, the long-term picture is that these arrays save utilities and customers more money as they can collect more energy.
When you combine those solar panels with SunPower’s new foray’s into being a full solar contractor, its prospects begin to brighten. Perhaps even more so, as SPWR continued to focus on commercial rooftop installations for major businesses.
With the continued demand for solar energy and the backstop that energy giant Total provides, SPWR should be able to make it through the current cloudy skies. At $8 per share, it might be one of the best values when it comes to all the solar stocks for the long haul.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
