SunPower Corporation (NASDAQ:SPWR) is suddenly hot. Again. The growing recognition that we must ramp up the fight against climate change helped to spur interest in this solar-panel manufacturer. After several quiet years, SPWR stock gained steam in 2020. But the real growth spurt came with the election of a new president with a promise of big spending on clean power. At this point, SPWR stock is up 155% since the election.
This California-based company has been publicly traded since 2005. During that time, its shares have seen several huge price spikes only to give up all the gains. SPWR started 2020 at $5.17, ended the year at $25.64, then started 2021 on a roll. At this point it’s trading at over $45, for a 770% gain since the start of last year. The question is whether the company (and its stock) can maintain the momentum this time around. I think this time it sticks. Here’s why.
The Green New Deal Sparks Interest in SPWR Stock
For SunPower, there are three big differences in 2020, 2021 and going forward compared to previous cycles of interest in solar energy.
First, solar-panel technology has improved significantly. Modern solar cells are far more efficient than they were a decade ago, and they are dramatically less expensive to manufacture. That combination makes solar-panel installation a much more economically viable proposition.
Second, previous big drops in SunPower stock were largely triggered by outside forces that changed the economic equation. In 2007, it was a recession and falling oil prices. With cheap oil, interest in solar waned, and with a recession, few consumers would go to the expense of a solar installation. We had both of those same conditions in 2020, but instead of dropping, SPWR stock spiked. This time, the interest in solar power is driven largely by the realization that we need to move on climate change before it’s too late. Cheap oil doesn’t matter.
Third, is the Green New Deal, and this is a true game changer. Solar is far more efficient, more economical and enjoys more support than ever as an environmentally friendly energy source. But the election of President Joe Biden brings the promise of $1.7 trillion in government spending aimed at achieving a zero-carbon-emissions economy. That includes upgrading the nation’s electrical generation to 100% renewable and zero-emissions power.
Put those first two factors in play, then add the muscle, momentum and government dollars of the Green New Deal. Solar power is finally on the verge of going mainstream. It’s no wonder that SPWR stock caught fire. And this time, there’s nothing to derail that growth.
The Vast Potential of Solar Energy
In case there there was any doubt that we could generate sufficient solar power to make a difference, consider this number.
In 2011, MIT Professor Washington Taylor told MIT News that 173,000 terawatts of solar energy strike the earth on a continual basis — more than 10,000 times the world’s total energy use at the time. To harness that energy, solar panels like those made by SunPower are key.
Any sustainable energy development strategy is going to include a mix of energy sources — not just solar, but also wind and tides, for example. But there is plenty of room for solar installations in the U.S., including on consumers’ roofs. What about the challenge of storing energy for release during downtime, an issue that doesn’t exist for traditional generation methods like gas-fired generators? SunPower has a solution, in its SunVolt battery storage system.
Bottom Line on SPWR Stock
The turning of the tide away from fossil fuels and toward renewable, sustainable energy has upended the market. There are energy stocks that should be sold as quickly as possible if they’re in your portfolio. Then there are the energy companies that are on the rise. SunPower is one of those.
SPRW stock is well worth considering if you want a future-friendly energy stock in your portfolio. It currently has an “A” rating and a strong buy recommendation in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.