SPECIAL REPORT The Top 7 Stocks for 2024

If You Can Only Buy One Solar Stock in December, It Better Be One of These 3 Names

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  • Each of the companies below is a great bargain.
  • First Solar (FSLR): First Solar is substantially undervalued.
  • Brookfield Renewable (BEPC): BPEC is rising amid regulatory tailwinds.
  • Enphase Energy (ENPH): Analysis suggest Enphase may be 45% undervalued.
top solar stocks - If You Can Only Buy One Solar Stock in December, It Better Be One of These 3 Names

Source: Fit Ztudio / Shutterstock

These top solar stocks are leading the way forward amid the world’s transition to green energy initiatives. It’s common knowledge that many countries (including the U.S.) are tracking well behind their goals to curb carbon emissions. Still, for many countries, these emissions continue to track higher year-over-year.

This is why countries like Australia are giving subsidies to install solar-powered systems in homes, to the delight of the region’s top solar stocks. Similar catalysts will soon be seen in other parts of the world, lifting the prominence of these solar stocks.

Let’s further discuss the top solar stocks you should consider.

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.
Source: T. Schneider / Shutterstock.com

First Solar (NASDAQ:FSLR) is a leading US-based manufacturer of solar panels. Its focus on advanced thin-film photovoltaic technology helps to give it an edge over its competitors.

FSLR recently reported earnings that exceeded expectations. Its adjusted earnings of $2.50 per share, coupled with revenue reaching $801 million, significantly exceeded the expected $2.05 per share.

Furthermore, First Solar has raised the lower end of its full-year guidance, signaling expectations for higher operating income in 2023. The company also highlighted a growing backlog of projects, now reaching 81.8 gigawatts and an increase in year-to-date bookings.

Underlining these accomplishments is that FSLR appears to be substantially undervalued. The company’s trailing PE ratio is 35.29, but its forward PE ratio is significantly lower at 12.60, suggesting expected earnings growth. The price-to-sales (PS) ratio is 5.27, with a more favorable forward PS of 3.65. So, both on earnings and sales growth expectations, FSLR is one of the top solar stocks.

Brookfield Renewable (BEPC)

A phone displaying the logo for Brookfield Renewable Corporation (BEPC)
Source: Piotr Swat / Shutterstock

Brookfield Renewable (NYSE:BEPC) operates a diverse range of renewable energy facilities, including solar, wind and hydropower.

The bull case for BEPC hinges on its recent positive momentum and future potential. The stock soared 6% recently, buoyed by the Australian Competition and Consumer Commission’s approval of the takeover of Origin Energy (OTCMKTS:OGFGF), which is a major Australian energy retailer. This takeover boosted investor confidence in BEPC.

Furthermore, there’s an expectation of a significant year-over-year improvement in its earnings. Revenue is also projected to grow by 14.9% from the previous year.

Heading into next year, the stock is forecasted to increase by 28.68% with a target price of $34, backed by a consistent analyst consensus of “Buy.” Additionally, EPS are expected to almost double by 2024. This makes BEPC one of the top solar stocks that investors should have on their watchlists.

Enphase Energy (ENPH)

mobile phone screen with Enphase Energy (ENPH) logo on it to represent renewable energy stocks
Source: IgorGolovniov / Shutterstock.com

Enphase Energy (NASDAQ:ENPH) specializes in inverters, EV chargers and batteries for solar systems.

In the short term, ENPH offers investors a contrarian and slightly risky opportunity to bet against the grain of many investors feeling timid about scooping up shares. This lack of broad optimism could mean ENPH’s stock trades below its fair value.

Specifically, the company forecasted weak results for Q4 2023 and Q1 2024, with expected revenue drops and margin pressures, particularly in its core microinverter business and battery segment. However, Enphase’s market position remains strong, suggesting a possible recovery post-mid-2024.

The heart of the matter for patient ENPH investors is that the upside for ENPH stock is its estimated intrinsic value at $177 per share, suggesting it’s potentially 45% undervalued compared to its current stock price.

In the long term, companies are valued fairly for what they are worth on paper and their cash flows. And ENPH ticks both of those boxes handsomely. This then makes it one of the top solar stocks that investors should consider buying for December and beyond.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.


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