SPECIAL REPORT The Top 7 Stocks for 2024

3 Solar Stocks for the Savvy Investor: Enphase Energy, First Solar, SolarEdge

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  • S&P Global (SPGI) data revealed modest growth for the U.S. economy. 
  • Enphase Energy (ENPH): Its superior technology and growing market fuels growth.
  • First Solar (FSLR): FSLR secured an additional 700 megawatts of advanced PV solar modules.
  • SolarEdge Technologies (SEDG): SolarEdge has opportunities for significant growth after its short-term losses.
solar stocks - 3 Solar Stocks for the Savvy Investor: Enphase Energy, First Solar, SolarEdge

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The latest data from S&P Global (NYSE:SPGI) revealed that the U.S. economy saw modest growth in early November. The Flash U.S. Services Business Activity Index rose to its highest level in four months to 50.8 in November, marking an increase from the previous month’s 50.6. That surpassed the anticipated reading of 50.2, as projected by economists surveyed by the Wall Street Journal. The uptick in the services index suggests a positive shift in the pace of economic expansion. The encouraging trend in economic activity bodes well for the solar market’s growth, as investing in these three solar stocks is an attractive opportunity to leverage the increased demand and support for renewable energy solutions.

Enphase Energy (ENPH)

mobile phone screen with Enphase Energy (ENPH) logo on it to represent renewable energy stocks
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Enphase Energy (NASDAQ:ENPH) is an American solar company that develops and manufactures battery energy storage and EV charging stations for residential customers.

ENPH’s stock is down 62.18% year-to-date (YTD), but 34 analysts project a 12-month median-to-high forecast of $114 to $160, or a 16% to 62.8% upside. The renewable energy market is valued at $1.21 billion as of 2023 and is projected to grow at a CAGR of 17.2% from 2024 to 2030. Reasons for this growth include urbanization, awareness and the introduction of solar power worldwide.

Annual earnings grew from $0.46 billion in 2022 to $0.67 billion in 2023, representing an increase of 46.9%. Revenue grew 16.39% YoY from $2.33 billion to $2.71 billion, and the EBIT Margin reached 22.59%, significantly more than the sector median of 9.8%. These metrics indicate that Enphase is growing strong while remaining profitable.

Enphase’s biggest competitive advantage is its superior technology. The company was a pioneer in solar power, revolutionizing it in 2006 through the introduction of the first advanced microinverter technology. Every solar panel is equipped with its own micro inverter, making it so that if one panel slips into the shade or malfunctions, the other panels keep generating power. That differentiates Enphase from competitors and makes it a leader in purchases from day-to-day residential customers.

Overall, due to the rising industry paired with its competitive advantages, ENPH is an excellent solar stock to diversify your portfolio.

First Solar (FSLR)

Person holding smartphone with logo of US renewable energy company First Solar Inc. (FSLR) on screen in front of website. Focus on phone display. Unmodified photo.
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First Solar (NASDAQ:FSLR) is an American solar technology company at the forefront of the sustainable energy movement, specializing in advanced thin film photovoltaic (PV) modules. FSLR stock is priced at $231.84, with analysts providing a price target range of $155.04 to $326.00.

First Solar exhibits robust financial performance, evidenced by a positive trajectory in total revenue to reach $3.1 million TTM. Gross profit witnessed a significant increase, rising from $70,000 in 2022 to $860,000, and surpassed its target stock prices for both Q2 and Q3, underscoring reliability and strong market performance.

Notably, solar energy stands out with a remarkable nine-year CAGR of 13.5% from 2023 to 2032 on growth.

The extended partnership between Silicon Ranch and First Solar, securing an additional 700 megawatts (MW) of advanced PV solar modules, serves as a driver for growth. That expansion, within the 4-gigawatt master supply agreement, aligns with shared commitments to promoting lower-carbon production and increasing domestic supply. These additional PV solar modules enable FSLR to produce more advanced solar modules.

FSLR is a stock to purchase into portfolios as it is at the forefront of the market.

SolarEdge Technologies (SEDG)

SolarEdge logo on phone with American flag background. SEDG stock
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SolarEdge Technologies (NASDAQ:SEDG) is a solar company specializing in innovation that optimizes solar power generation and develops DC-optimized inverter systems. 

The renewable energy industry is projected to increase at a 14.4% CAGR between 2024 and 2030, which results in a revenue forecast of $17.68 billion. Given SolarEdge’s grasp of the market share, SEDG would gain long-term benefits from the overall macroeconomic expansion.

The company’s P/S ratio of 1.30 is significantly much lower than its competitors, such as Enphase — which has a P/S ratio of 5.36 — and Shoals Technologies‘ (NASDAQ:SHLS) ratio of 6.39. Analysts predicted an average price target of $103.31, with prices ranging from as low as $34.42 to as high as $300.00. 

Despite a 72.6% YTD decline in SEDG stock, short-term influences such as interest rates are impacting its trajectory. However, as the economy recovers, reduced mortgage rates could spur increases in solar panel installations. The correlation lies in the increased affordability of renewable energy solutions, making them more attractive to homeowners. That insight allows for growth on SEDG stock before market sentiment returns to positive as economic conditions recover.

Overall, with the leveling of interest rates and low valuation, SEDG is a compelling buy. 

On the date of publication, Michael Que did not hold (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.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.


Article printed from InvestorPlace Media, https://investorplace.com/2023/11/3-solar-stocks-for-the-savvy-investor-enphase-energy-first-solar-solaredge/.

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