- Enphase Energy (NASDAQ:ENPH): Strong growth in the residential solar market and market share gains continue to boost top-line growth.
- SolarEdge Technologies (NASDAQ:SEDG): Serves a range of solar market segments, including residential, commercial and small utility-scale solar installations.
- SunPower (NASDAQ:SPWR): Strong residential demand has resulted in its largest-ever sales backlog.
With crude oil still trading above $100 per gallon, market participants are looking at solar energy stocks.
As an affordable energy source, the solar industry will play a key role in meeting global energy needs through this decade. Fortune Business Insights estimates that until 2028. the solar industry will grow at a compound annual growth rate (CAGR) of 6.9%.
Moreover, federal clean energy policies should provide further tailwinds for the solar industry. For instance, dozens of House Democrats have recently called on President Joe Biden to restart negotiations on the climate portions of the Build Back Better legislation.
According to data from trade group Solar Energy Industries Association, solar capacity installed in the U.S. is over 121 gigawatts (GW), or enough to power 23.3 million households. Solar energy accounted for close to half of all new electricity-generating capacity added in 2021.
Meanwhile, it is not only the U.S. that is putting increasing emphasis on alternative energies. Europe strives to become the world’s first climate-neutral continent by 2050. In 2020, renewable energy represented 22 % of all energy consumed in the European Union (EU). Moreover, solar energy was the fastest-growing energy source.
With that information, here are details on the three pure-play solar stocks that could generate lucrative returns in 2022.
Solar Stocks Set to Shine: Enphase Energy (ENPH)
- 52-week range: $108.88 – $282.46
Fremont, California-based Enphase Energy provides home energy management solutions that combine solar generation, energy storage, and monitoring solutions. In addition, through the ClipperCreek acquisition, it has added electric vehicle (EV) charging services.
Enphase issued fourth-quarter 2021 results on Feb. 8. Revenue increased 56% year-over-year (YOY) to a record-high $413 million. Non-GAAP net income jumped to $103 million, or 73 cents per diluted share, up from $71 million in the prior-year quarter. Cash and equivalents ended the quarter at $1 billion.
Management anticipates Q1 revenue will be between $420 million and $440 million. Enphase is also buying SolarLeadFactory, which provides high-quality leads to solar installers. This acquisition adds lead generation capabilities to the company’s toolset.
ENPH stock is up 21% over the past year. Shares are trading at 55.9 times forward earnings and 17.7 times trailing sales.
These high multiples for the solar energy name mean investors might wait for a dip in price before hitting the ‘buy’ button in ENPH. Meanwhile, the 12-month median price forecast for Enphase Energy stock stands at $220.
SolarEdge Technologies (SEDG)
- 52-week range: $199.33 – $389.71
Israel-based SolarEdge Technologies manufactures power optimizers and solar inverter systems. These help minimize the cost of energy generated by its devices.
SolarEdge released Q4 2021 results on Feb. 15. Revenues jumped 54% YOY to $552 million. Non-GAAP net income came in at $62.8 million, or $1.10 per diluted share, up from $55.7 million in the prior-year quarter. Cash and equivalents ended the period at $548 million.
Focusing on low-cost power optimizers has allowed SolarEdge to gain market share over the last two years. In addition, the growing adoption of its technology by public utilities continues to boost the top line growth.
SEDG stock is up 15% over the past 12 months. Shares are trading at 50.5x forward earnings and 9.1x trailing sales. The 12-month median price forecast for SolarEdge Technologies stock is $336.50.
Solar Stocks Set to Shine: SunPower (SPWR)
- 52-week range: $14.00 – $35.09
San Jose, California-based SunPower is a vertically integrated solar module manufacturer, focused on selling and financing solar panels.
SunPower announced Q4 2021 results on Feb. 16. Revenue increased 13% YOY to $385 million. Non-GAAP net loss narrowed to $13 million, or 7 cents loss per diluted share, down from $26 million in the prior-year quarter. Cash and equivalents ended the quarter at $127 million.
The company recently agreed to sell its commercial and industrial business to TotalEnergies (NYSE:TTE) for $250 million. TotalEnergies is currently SunPower’s majority owner, holding a 50.8% stake in the company.
Management now wants to expand the residential sector business after its acquisition of Blue Raven Solar, a leading residential solar provider stateside.
SPWR stock is down about 35% over the last 12 months. Yet, the stock price has jumped 50% since the 52-week lows of $14 set on Feb. 24.
Shares are trading at 75.8x forward earnings and 2.7x trailing sales. Finally, the 12-month median price forecast for SPWR stock stands at $19.50.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.