The United Nations’ recent report is a stark reminder of the critical importance of greener energy sources, particularly solar power. With a rapidly narrowing window to build a sustainable future, the potential of the most promising solar stocks is massive. Moreover, with the Inflation Reduction Act offering a staggering $10 billion in new energy tax credits, the sector will forge ahead with aplomb.
It’s imperative to understand that the secular trends propelling solar energy’s growth remain firmly in place. Greater awareness of climate change and an ever-increasing demand for cleaner energy sources is fueling the demand for solar energy. Moreover, the declining costs of solar photovoltaic (PV) systems over the past decade have made solar energy more accessible. With this in mind, let’s delve into the top three solar stocks that stand out in this burgeoning space.
Most Promising Solar Stocks: First Solar (FSLR)
First Solar (NASDAQ:FSLR) is the largest solar manufacturer based in the U.S. and continues to get even bigger every year. With its utility-scale loyal customer base, the firm is effectively shielded from hefty volatility in its fundamentals.
The push towards clean energy and rising gas prices due to the Russia/Ukraine war led to a robust showing for First Solar in 2022. The firm amassed an impressive 48.3GW in net bookings for the year, representing a 176% bump over 2021. Moreover, it recorded an enormous backlog of 67.7GW and plans to invest $1.2 billion to scale its PV module production further.
Though it trades at a lofty valuation, UBS analyst Jon Windham believes that the stock could climb even higher to $250 per share, a 17% upside from current levels. The company will likely be a significant beneficiary” of the Inflation Reduction Act.
SolarEdge Technologies (SEDG)
SolarEdge Technologies (NASDAQ:SEDG) is a leading solar energy firm that specializes in the production of PV inverters, software tools, monitoring tools, optimizers, and other solutions. The company aims to become an all-encompassing solar solutions enterprise, offering a wide range of solutions apart from its inverters. Moreover, it boasts a presence in 36 different countries across the globe, shipping over 40 GW of energy systems since it was founded in 2006.
It recorded record sales last year from its solar segment, generating a whopping $2.9 billion, a 63% improvement from last year, with overall sales of $3.1 billion. Additionally, non-GAAP earnings-per-share came in at a remarkable $5.95.
Its strong market positioning in Europe bodes well for its business, generating nearly 75% of its business outside the U.S. It witnessed almost 90% growth in Europe last year as the region reduced its dependency on Russian natural gas.
JinkoSolar (NYSE:JKS) is a Shanghai-based solar panel producer with a leadership position in the space. It boasts a geographically diverse customer base spanning over 150 countries across the globe.
2022 was a banner year for the business, producing 44.5 GW of solar panels, a 77% bump from last year. Photovoltaic (PV) sales in China were up 65% last year, a three-fold improvement, while results from Europe also doubled on a year-over-year (YOY) basis. Overall, the firm’s revenue growth is a whopping 104.6% YOY, more than 600% higher than the sector median.
Moreover, the firm expects solar cell production to reach an estimated 75 GW by the conclusion of this year. A key growth driver could be its U.S. business, a lagging outlier last year in the PV sphere. However, the supply-chain hiccups will likely be sorted this year, leading to a healthy bump in sales from the U.S.
On the date of publication, Muslim Farooque 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.