Renewable energy is widely expected to be one of the most attractive sectors for investors in 2021 and beyond. The outgoing Trump administration took a policy of benign neglect toward renewables. But that’s all changing. And solar stocks look to be among the beneficiaries of a more accommodating policy.
However, while many investors are looking at the United States, they would do well to look into a land further east. And I’m not referring to China. In this case, I’m bringing up India.
India is the leading consumer of coal. And the conventional wisdom was that any efforts the United States could make to lessen our dependence on fossil fuels would be undermined by mega-polluters like China and India. But that narrative is changing.
As reported on the website, foreignpolicy.com, “India is undergoing a green-energy revolution –exceeding targets, breaking records, and quickly making the age of cheap clean energy a reality.”
And solar is a large part of this renaissance. In 2019, India became the third-largest solar market in the world with 7.3 GW of solar power installed across the country. And in August of 2020, India was four years ahead of schedule on meeting its initial target of having 20 GW capacity.
And according to the Department for Promotion of Industry and Internal Trade (DPIIT), new investment in clean energy was $11.1 billion in 2018.
With all that said, quality and scale matter when it comes to the solar companies you should look to invest in. And we’re going to take a closer look at three of the best you should be looking at as the calendar gets ready to change:
- JinkoSolar Holding Co. (NYSE:JKS)
- Brookfield Renewable Partners (NYSE:BEP)
- First Solar (NASDAQ:FSLR)
Solar Stocks: JinkoSolar (JKS)
The first of the solar stocks to look at is JinkoSolar. The Chinese company is one of the largest suppliers of PV modules to India. All of the PV modules that shipped in the first quarter featured the company’s proprietary mono PERC technology, comprising full-cell and half-cell modules.
The company is managing to increase its market share in the region. This is no small feat considering the supply chain pressures caused by the novel coronavirus. The company is also primed to be a leading supplier to China and the European Union as they begin to ramp up their solar ambitions.
JKS stock has climbed more than 200% in the last three months. The company just reported earnings and while they met revenue expectations, they exceeded profit expectations. However both numbers were higher from the same quarter in 2019.
Despite its lofty price surge in the last three months, the stock trades at an attractive P/E ratio of 19.78. For a company with a market cap of $2.8 billion, JinkoSolar looks like a smart buy regardless of what happens to the United States solar market.
Brookfield Renewable Partners (BEP)
For many investors, when they think about BEP stock, their first thought is hydroelectricity. And with good reason, Brookfield’s network of 5,300 power generation facilities makes up the majority (65%) of the company’s capacity.
But Brookfield is in the process of making an aggressive pivot to becoming one of the leading solar companies. The company is confident that within the next decade it will flip the script and generate the majority of its production capacity via solar power. And a key to that growth is the company’s investment in India.
Brookfield has been eyeing the market for several years and finally began to make inroads in 2017. At the time, Brookfield conceded it was behind China in its development of the Indian solar market. This is particularly important as the installation cost for solar has dropped more than 75% in the last five years.
However, in August, CEO Sachin Shah noted the growth in the company’s solar business. Specifically, the company had 3,000 megawatts of solar in operations with an additional nearly 10,000 megawatts under development.
First Solar (FSLR)
As one of the country’s leading solar stocks, First Solar does not come cheap. FSLR shares currently trade near its yearly high. But despite concerns that it may be butting up against the limits of current solar technology, the company is still very healthy.
North America and Europe are the country’s first and second largest markets respectively. However, First Solar has been selling solar modules to third parties and developing utility scale PV assets in India since December 2011.
First Solar is the industry leader in thin-film solar panels. These panels are proven to perform better in hot, humid conditions frequently found in India, which makes them ideal for utility-scale applications.
The election of Joe Biden will eventually boost solar demand in the United States. But India is already a true believer in the solar arena, and First Solar is well positioned to help India in its green movement.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019.