Solar stocks are doing exceedingly well this year, despite the gutting of the oil industry. Historically, lower oil prices have proven to be counterproductive for clean energy markets.
With the lower oil prices, the government and other companies would probably be less inclined to invest in clean energy. However, that seems to have changed with the Invesco Solar ETF (NYSEARCA: TAN), yielding more than 77% returns in the past year.
The solar industry includes a variety of businesses which primarily make components, operate facilities or install solar panels. Collectively, these companies are working to move global economies from fossil fuels.
The International Energy Agency states that the worldwide energy capacity is expected to grow to 1,200 gigawatts by 2024. Solar power will account for a 60% share of that growth. Therefore solar stocks will become some of the most lucrative investment options in the future.
Let’s look at three of the most promising ones:
- JinkoSolar Holding Co. Ltd (NYSE:JKS)
- Solaredge Technologies Inc (NASDAQ: SEDG)
- Enphase Energy Inc (NASDAQ:ENPH)
Solar Stocks: JinkoSolar Holding Co. Ltd (JKS)
JinkoSolar is a Chinese solar energy company that manufactures solar products such as modules, wafers, and cells. Moreover, it provides system integration services. Despite the challenges presented by the novel coronavirus, the company has done well by focusing on high-efficiency solar products. As a result, JKS stock is generating a 64.8% return relative to the S&P 500.
It recently reported its stellar second-quarter results. Revenue improved 22.2% year-over-year with shipments of 4,469 panels in the quarter. Gross margins improved by 1.4% to 17.9% from the prior-year period. The margin improvements are linked to an “increasing shift toward integrated, mono-based, high-efficiency-products capacity.” Moreover, net profit improved by a massive 67% to $47 million.
As economies have started to rebound, expect demand to improve substantially in the latter half of the year. Despite the dips in its solar module business, it acquired large integrated manufacturers to expand its market share. Hence, all in all, it appears that the company is in a rock-solid position currently.
Solaredge Technologies Inc (SEDG)
SolarEdge Technologies is an Israeli solar energy company that creates smart solar solutions. It provides inverters, photovoltaic monitoring, power harvesting accessories, and others. Covid-19 has done little to impact SEDG stock’s returns, generating 121% in the past year and earning a spot on this list of solar stocks to buy.
The company recently reported its better-than-expected second-quarter results. Revenue and GAAP earnings per share exceeded expectations by $12.3 million and 22 cents, respectively. However, compared to the second quarter last year, revenue dropped 23% to $331.9 million. Margins decreased slightly but remained solid overall. Additionally, its liquidity position remains steady despite the $48.4 million drop in operational cash flow.
Despite some negatives, it’s clear that the company has stayed resilient despite the crisis. Especially on the European front, it witnessed a massive $122 million increase in revenue from the previous quarter. Such numbers illustrate the company’s growing presence in different countries apart from the U.S. With its diversified portfolio and growing geographical presence, expect the company to become a significant player in the future.
Enphase Energy Inc (ENPH)
Enphase Energy manufactures solar cells and monitoring devices for homeowners, large scale companies, distributors and others. It continues to expand its market share by adding different solar energy products and services. Covid-19 has done little to slow down ENPH stock’s progress as its 12-month return is at a colossal 177.4%.
The company recently reported second-quarter results, which were naturally marred by the pandemic. Revenue dropped 39% sequentially due to repressed demand during the quarter. However, it posted a record 39.6% non-GAAP gross margin. This wasn’t enough to turn a profit as the company posted a net loss of $47.3 million.
Despite the relatively weak results, the ENPH stock price continues to soar. The company continues to work with partners and operations teams to manage its distribution channel. Additionally, the company is expanding into different European territories through strategic collaborations with local giants. Enphase’s third quarter looks more promising, with revenue expected to rise sequentially, making it one of the solar stocks to consider.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.