Solar stocks are the right choice if you want to invest in the energy sector. As technology evolves, people are shifting to solar energy as the primary source of electricity, which results in high demand for solar companies.

In 2023, the solar industry gained momentum after facing a bad period, installing nearly 12 gigawatts in the first half, bouncing back from a slowdown in 2022. This resurgence was fueled by increased investments and a growing awareness of the importance of renewable energy in the fight against climate change.

As more funding and attention are directed toward the industry, technological advancements make solar energy more efficient. Governments worldwide are also pushing for cleaner energy solutions. This positive momentum suggests that the solar sector is on a transformative journey, poised to impact how we generate and use energy globally significantly.

The solar industry’s future is gearing up for long-term growth. Analysts predict 9% annual growth for utility-scale solar after 2023. Residential solar is expected to grow at a 6% rate, and non-residential solar at 8% over the next five years.

Without further ado, let’s see the three best solar stocks with upside potential in 2024.

First Solar (FSLR)

First Solar (NASDAQ:FSLR) is one of the leading solar companies with a market capitalization of $16.5 billion. This year has been full of challenges for the company, and as a result, its stock has been down by 6.27% over the past year due to imperfect market conditions and rising interest rates. However, the company made a good comeback in November with a 13.45% increase, reaching $155. The rise occurred after numerous analysts raised their price targets for the energy producer’s stock.

Moreover, the third-quarter results showed improvement financially, with revenue coming in at $801 million, a 27.37% increase year over year. Also, gross profit reached $376.18 million, reflecting a 1,600% increase year over year. An

According to TradingView, “the forecast price target for First Solar in 2024 is $239.14, which would be a 62.71% increase. The 22 analysts offering 1-year price forecasts for First Solar have a maximum estimate of $326.00 and a minimum estimate of $185.001.”

Considering all these positive developments, I suggest that potential investors consider adding First Solar stock to their portfolio, as it has the potential to yield significant profits in the coming year.

Shoals Technologies (SHLS)

Shoals Technologies (NASDAQ:SHLS) is a growing company in the solar industry. It produces electrical balance of system solutions – essentially everything you need for a solar power system besides the panels. The company posted decent financial results in the third quarter of 2023, with revenue of $134 million, up 48% YOY. Its adjusted EBITDA surged by 81% year over year, reaching $48 million.

Nevertheless, its gross profit decreased to $14.2 million in the same quarter, down from $36 million. This happened because the company’s expenses were high, and issues with wire insulation shrink back caused a decline. Consequently, Shoals Technologies Group has sued Prysmian Cables and Systems USA, the wire supplier, for defects that occurred during insulation.

Despite all these difficult factors, the future for Shoals Technologies looks promising as the company continues to increase revenue through innovative solutions and strategic initiatives, positioning itself for growth and success in the solar industry.

Moreover, according to SimplyWallSt.com, the company is expected to experience growth in earnings and revenue at an average annual rate of 24.1 % and 23%, respectively. That’s not a bad deal for investors who get into SHLS stock now.

Sunrun (RUN)

Sunrun (NASDAQ:RUN) is an American solar company famous for its residential solar systems and batteries. This year was challenging for Sunrun. Its stock has declined 64% due to decreased solar demand.

However, Sunrun has shown resilience and adaptability in Q3 despite these challenges. The company experienced significant growth, with a 131% YOY increase in installed storage capacity. Its revenue increased to $316.5 million, up from $271.2 million last year.

This upward growth continued as Sunrun saw a significant increase in net subscriber value in the third quarter. The company added 33,806 customers, bringing the total number of customers to 903,270. As a result of this growth, the company’s annual recurring revenue from subscribers, of which it has 754,087, exceeded $1.2 billion.

Why buy RUN stock? There are several compelling reasons. First, its shares are now selling at a reasonable price on a low valuation. Second, analysts predict Sunrun stock will rebound next year and soar to $25, a 114.65% increase in the next 12 months.

In addition, Sunrun is projected to achieve a robust growth rate, with forecast annual increases of 73.9% in earnings and 8.6% in revenue. Considering all these reasons, Sunrun could be a valuable addition to an investment portfolio.

On the date of publication, Nauman Khan 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.