Solar stocks have been on fire lately (pun intended). The sector got a boost from the Biden administration announcing a broad goal for 45% of the country’s energy supply to come from solar by 2050. That’s up from 4% provided by the sector by 2020.
And as one of the many steps to reach this goal, the sector got an additional catalyst in June when the Biden administration announced the suspension of tariffs on solar panel components from four countries.
Think of it like a lock and a key. The lock is the 45% target objective. The suspension of tariffs is one of the keys used by the administration to help break bottlenecks in the supply chain.
However, the tariff news only accelerated the year-over-year trend. Many research companies agree that the solar market will grow at a compound annual growth rate (CAGR) of more than 20% in the next five years. and Fortune Business Insights it is estimated that the global market will be worth $1 trillion by the end of 2028.
Many companies benefit from this trend. This article highlights three stocks that look to benefit from the solar rush.
An Industry Leader With More Store Growth
Sunrun (NASDAQ: RUN) has one of the largest installed bases in the United States. The company is known for home solar and battery storage solutions including solar panels, racks, and solar leads. The San Francisco-based company has more than 600,000 customers across 22 states.
Unlike the other two stocks on this list, Sunrun’s shares are flat in 2022. That puts FUN stock below current analysts’ expectations of $48 per share. But you can’t blame that on income. Sunrun posted strong sequential and year-over-year revenue growth. And with CAGR projections for the industry, that’s not likely to slow down.
The issue may be more than income. Sunrun still doesn’t deliver consistently positive returns. However, in the most recent quarter, it posted a solid 70% beat with earnings coming in at negative 6 cents a share as opposed to negative 20 cents a share. predicted.
This Top US Manufacturer Predicts Strong Revenue Growth
First Solar (NASDAQ: FSLR) will be one of the solar companies that will benefit the most from the Biden administration’s Inflation Reduction Act. Specifically, the bill provides $40 million in aid to solar manufacturers. First Solar is a US-based company that already has the manufacturing infrastructure up and running.
The company manufactures solar power systems and modules and is known for its proprietary thin-film module. This allows for better performance in low light and hot weather. In addition, the modules are larger than other modules which helps to reduce the cost per watt.
First Solar plans to increase its manufacturing footprint with the help of the money it will receive from this law. And the company showed a strong backlog of orders until 2024.
However, some investors may wonder if it’s too late to join the rally. FSLR stock is now up 49% for the year with all the gains coming after the announcement of the tariff suspensions. That has the stock trading above consensus price targets among analysts tracked by MarketBeat. But with sales expected to grow an average of 27% over the next two years, it’s likely that the stock has more upside to come especially with the knowledge that it doesn’t rely on any silicon from China in its operations. in its manufacture.
A Compelling Partnership Adds Juice to This Company
The last stock in this short list of solar stocks is SunPower Corporation (NASDAQ:SPWR). This is another American company that provides solar, storage, and home energy solutions. And while it has commercial clients, it’s the company’s appeal to residential consumers that caught my attention.
Specifically, SunPower has a collaboration with IKEA with the goal of making solar power more accessible to consumers. The partnership will begin in select California markets this fall.
SPWR stock is up 26% this year and is above the current price target of analysts tracked by MarketBeat. However, analysts raised their price targets after the company posted revenue that was 60% higher than last year. The company also cited a strong backlog of orders for its products that add confidence to future earnings and revenue growth.