You may think an article about the best solar stocks to buy in August 2024 would be a laughably short article. Few sectors have been as acutely affected by inflation and interest rates as solar energy companies. But if you believe in the idea of manifestation, there could still be a life-changing opportunity in solar stocks.
In its simplest form, the bullish case is this. Solar accounts for approximately 4% of U.S. energy production. However, the Solar Energy Industries Association (SEIA) is now targeting solar to account for 30% of U.S. electricity generation by 2030. That’s up from the 20% target the organization announced in 2019.
The SEIA admits that to hit this target will require “bold policy action and continued private sector innovation.” Neither of those is a given. But even the company’s “business-as-usual” forecast is for solar to be 15% of U.S. production.
That’s nearly three times what it is today. But it still requires a healthy belief in a sector that has many stocks among the market’s biggest laggards. If you believe in the long-term prospects for solar, these three names could be among the best solar stocks to buy.
First Solar (FSLR)
First Solar (NYSE:FSLR) is the kind of company that many people think about when it comes to solar companies. It makes photovoltaic solar panels for residential and commercial applications. FSLR stock is up 23% this year, but notably down about 30% since hitting a high of around $300 on June 12.
The company got a boost from government spending in the Inflation Reduction Act (IRA). Much of that IRA revenue has been going towards outfitting data centers. The company is noticing slower bookings in its most recent quarter, and that’s something investors will want to watch.
Analysts don’t seem to be concerned with many raising their price targets on FSLR stock after the company reported earnings in July. The stock also appears to have confirmed a key level of support. But a tepid post-earnings rally was whipsawed by the recent market sell-off. The company needs more private sector funding, and an interest rate cut or two could be the fuel for that growth.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) manufactures energy storage solutions. The company is perhaps best known for its microinverters that attach to solar panels and alleviate, to a degree, concerns over harnessing solar energy at night or on cloudy days.
However, the company’s core residential market has been weak for over a year. The good news is that revenue is expected to increase in the last two quarters of 2024. The bad news is analysts expect it to top out at $1.4 billion. For perspective, that was about two quarter’s worth of revenue in parts of 2022 and 2023. But, if interest rates are forthcoming, estimates for revenue of $2.38 billion in 2025 may be too low.
ENPH stock is down 22% year-to-date and 27% in the last 12 months. If you just took that at face value, you’d think it’s been awful to own ENPH stock over the last year. And if you’re a long-term investor, that’s likely the case. However, as a trade, Enphase has likely been very profitable. The stock has been trading in a defined, albeit wide, range for much of the last year. Not surprisingly, short interest on ENPH stock is around 11%.
Array Technologies (ARRY)
Array Technologies (NASDAQ:ARRY) has an intriguing business model but a volatile stock price. Still, if you have the risk tolerance for promising stocks under $10, Array could be one of the best solar stocks for 2024 and beyond.
The company manufactures solar array systems. This allows solar panels to follow the sun as Earth turns throughout the day, maximizing the power generated. It’s such an obvious technology that you might think it’s got a booming order book. In its investor presentation from 2023, the company says that ground mount solar is the fastest-growing source of new solar generation in the United States.
But this remains a niche business and it shows up on the balance sheet. Revenue was down by more than 50% YOY in the first quarter of 2024. However, the company did manage to turn a profit. Analysts also remain bullish on the company, which (in fairness) could see a surge in revenue with a more favorable monetary policy.
On the date of publication, Chris Markoch 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
