Solar stocks might boom in 2024 as the Federal Reserve considers reducing rates three times after hiking them 11 times in a year and a half. Additionally, with inflation decreasing, markets are bullish, but solar equities are not.
While the S&P 500 is up 6%, the Invesco Solar ETF (NYSEARCA:TAN) is down 23% this year, bucking the dovish Fed’s market optimism.
However, the solar sector is growing steadily. Global photovoltaic installations rose in 2023, with China adding 260 GWdc. Global installations should rise in 2024. In 2023, residential and utility-scale solar installations set a record in the U.S.
The U.S. recorded module import and energy storage system installation. Solar technology component and module imports have increased due to duties exemptions.
These adoption rates show solar companies are cheap. We will examine three cheap solar companies with double- to triple-digit potential. The upside might be significantly bigger as the market grows from $82 billion in 2023 to $260 billion in 2031. Jump in!
Array Technologies (ARRY)
Array Technologies (NASDAQ:ARRY) has surpassed Wall Street projections four times, including the last quarterly EPS of 21 cents per share, 91% higher than the analyst estimate of 11 cents.
Despite tremendous success, ARRY stock is down 31% in 2024 due to lower-than-expected annual expectations. The company’s reduction of its annual prediction has lowered the stock’s price, making it ideal for investors looking for inexpensive solar stocks. Analysts predict a 68% upside.
Innovation is the main reason behind this upside. Array Technologies’ dual-row solar tracker STI H250 now features driveline motion transmission for enhanced tracking. This model decreases piles per tracker, increases East-West tilt tolerance and expands row North-South angles in tough terrains. With Array’s SmarTrack energy optimization software, the new tracker tilts solar systems for energy efficiency.
Plus, the business is planning another Albuquerque solar tracker. The $50 million, 216,000-square-foot facility will be on Albuquerque’s west side. Albuquerque, Bernalillo County and LEDA’s job development fund will contribute $2.5 million to the expansion. Construction begins in early 2024.
Lastly, Array Technologies will showcase its newest solar tracker at Genera 2024 in Madrid, Spain’s biggest energy and environment trade show. This could be a big boost for the stock.
Canadian Solar (CSIQ)
Array Technologies is having a great run of results, but Canadian Solar (NASDAQ:CSIQ) is running in the opposite direction. The company has missed profit expectations seven times in a row, with the most recent miss being 350%. Oh no!
All it can do is focus on its business and grow. To do this, Canadian Solar is constructing a 5GW solar cell factory in Jeffersonville, Indiana, at a cost of $800 million. This plant is planned to start making cells in 2025. The module assembly plant in Mesquite, Texas, will get supplies from this building.
Meanwhile, CSI Solar, a company that is part of Canadian Solar, hopes to make a lot more solar panels by the end of the first quarter of 2024. From 20.4 GW to 50.4 GW, the power to make ingots, wafers, cells and modules will all go up. Next, it will go from 35 GW to 50 GW, and then from 50 GW to 75 GW.
Last but not least, Canadian Solar is beginning a new project in China to make screens out of silicon. Thus, the business is continuing to expand and connect its supply chains so that it can run its business all over the world.
Investors will hope the expansion into China and the new $800 million plant will help realize the stock’s 84% upside potential.
First Solar (FSLR)
Like the other two solar stocks, First Solar’s (NASDAQ:FSLR) path forward will depend on its aggressive expansion in the solar business. It’s spending $1.2 billion to expand its U.S. manufacturing capabilities. As part of this plan, FSLR will update its Ohio plant and build a new 3.5 gigawatt (GW) factory in the Southeast. With this rise, the company’s solar power capacity will hit 10 GW in the next few years.
In addition, First Solar spent $680 million to expand its factory in Perrysburg, Ohio. With 700 full-time jobs, this project will create the largest solar production plant outside of mainland China.
In a smart move to move its technology forward, First Solar also paid $38 million to buy the Swedish perovskite expert Evolar. It is hoped that this buy will speed up the creation of very efficient tandem photovoltaic (PV) technology, which could greatly increase the amount of energy that solar cells produce.
On the financial side, higher module volumes and average selling prices boosted Q4 2023 revenue by 16% to $1.16 billion. After a loss last year, earnings were $3.25 per share, surpassing estimates.
With these credentials, expect a comeback soon, and the potential upside of over 22% reflects this narrative, placing it highly among solar stocks.
On the date of publication, Faizan 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.
