The solar industry is growing: more people are adding solar panels to their homes and at the same time, are looking to make money by investing in businesses across the solar industry. For investors, the solar industry represents a unique opportunity, encompassing companies across many different sectors including manufacturing, utilities, installation, and technology. With so many companies in this highly profitable emerging space, you may wonder as an investor: what are the most important things to look for when choosing what solar stocks to buy and how can you know what companies are safe to invest in? As with any stock-buying, there are many important factors to consider.
Disclaimer: This article is intended to provide an informational overview of different options available for investing in solar companies. It is not intended to serve as official investment guidance. Readers interested in investing in solar-based companies should use their best judgment and seek advice from a licensed professional before making any purchase or investment.
Key takeaways
The solar industry grew in 2021 and is expected to keep growing.
Legislation including the Build Back Better Act is beneficial for solar companies.
Investors should look to solar-focused companies including panel and inverter manufacturers.
There are many choices of solar stocks for investors, so it’s important to consider a company’s offerings when choosing.
As people across the world look more to renewable energy, solar companies will continue to be profitable.
To compare quotes with different types of solar equipment, check out the EnergySage Marketplace.
Investing in solar energy
The current environment is very favorable for the solar industry because of an increased focus of many governments, states, and companies in renewable energy generally and in solar specifically. Solar capacity from new installations expanded in 2021, signaling a steady rise in customer demand preceded by years of growth. On the policy front, new proposed legislation such as the Build Back Better Act includes expanding tax credits for domestic solar manufacturers. These factors, along with a greater desire for renewable energy spurred by rising prices for fossil fuels (including natural gas) mean that companies in the solar industry are a great choice for investors.
Solar stocks to invest in
While larger utility companies with solar divisions alongside other energy sources traditionally perform well, there are several companies who focus only on solar that are worth investing in this year.
First Solar
NASDAQ: FSLR Price as of April 6, 2022: $82.84
First Solar is one of the largest American solar companies, reporting $907.32 million in revenue as of December 2021 (a 48.93 percent increase year-over-year). Based in Tempe, Arizona, First Solar is unique in that they both manufacture and install solar panels. They are also a valuable choice for investors because they only work on utility-scale projects. So, unlike most companies which are involved mostly in smaller scale residential and commercial projects, First Solar products are only used in large projects.
First Solar manufactures thin-film cells using a proprietary combination of cadmium-telluride instead of the traditional crystalline silicon. In 2018, this allowed them to avoid many of the negative effects of that year’s solar tariffs. They saw an increase in sales of $0.3 billion at the end of Q4 2021.
Why invest in First Solar?
First Solar stands alone on this list as a domestic producer of solar panels. They’re also unique in their use of thin-film solar technology. If you want to invest in an American solar manufacturer or in a different type of solar panel technology, First Solar is a great bet.
SolarEdge Technologies
NASDAQ: SEDG Price as of April 6, 2022: $336.40
SolarEdge is another leader in the manufacturing sector of the solar industry. They’re one of the largest producers worldwide of inverters and power optimizers that work to convert the solar energy generated by solar panels into electricity. SolarEdge manufactures string inverters, which aggregate the power output of groups of solar panels in your system into “strings.” Multiple strings of panels then connect to a single inverter where electricity is converted from direct current (DC) – aka what your solar panels produce – to alternating current (AC) – aka what your appliances use – electricity.
String inverters are considered the least expensive type of solar inverter. For investors, what sets SolarEdge products apart from others is their lower cost. They’re also very flexible in terms of the variety of products they offer, including their own solar battery as well as other technologies. Spurred by their residential market growth, SolarEdge’s revenue increased from $1.4 billion in 2020 to $1.9 billion in 2021 according to their earnings report.
Why invest in SolarEdge?
SolarEdge is unique in their wide variety of offerings as well as their great prices. These new offerings include emerging technologies such as electric vehicle (EV) charging and storage, which make them a strong offering for the future. If you want to look for a manufacturer with a wide range of products, SolarEdge may be right for you.
Enphase Energy Inc.
NASDAQ: ENPH Price as of April 6, 2022: $212.95
Based in California, Enphase is a manufacturer of solar inverters as well as batteries and a variety of other panel-level technologies. Their microinverter technology works by having small inverters located at each panel in your solar system. For investors, this is important because microinverters are especially popular in the rapidly growing residential market since they allow users to monitor the performance of each individual panel.
While offering slightly more expensive products than other manufacturers, Enphase has seen success because of their variety of offerings including their all-in-one energy system. By the end of 2021, they reported record revenues of $412.7 million.
Why invest in Enphase?
Enphase is also based in the U.S. and is a good choice for investors because of their leading inverter technology. Because they use microinverters in each panel, when one panel fails, the system keeps running. If you want to invest in an American inverter manufacturer, Enphase could be a great stock to add to your portfolio.
SunPower
NASDAQ: SPWR Price as of April 6, 2022: $20.94
SunPower is another top solar manufacturer based in the U.S. with facilities across several continents. In 2019, they announced the start of a new manufacturing arm of their company called Maxeon which is focused on installation. They are primarily known for manufacturing solar panels, but also offer fully integrated generation and storage systems. What sets SunPower apart is their industry-leading solar panel efficiency which ranges from 20.1% to 22.8%. They also have a superior 25-year warranty.
Why invest in SunPower?
To put it simply, SunPower makes great solar panels. Theirs are among the most efficient on the market, rivaled mainly by LG’s offerings. In 2022, LG announced that they will no longer be manufacturing panels, leaving SunPower as one of the industry leaders in efficiency. SunPower’s all-in-one process from quoting through to installation and storage also makes them a good choice for investors.
JinkoSolar
NASDAQ: JKS Price as of April 6, 2022: $43.73
JinkoSolar is perhaps the largest manufacturer of solar panels in the world. Based in China, they have a facility in Malaysia as well as a newly-built manufacturing center in Jacksonville, Florida. Their best selling line in the U.S. is their Eagle series, which is manufactured domestically. JinkoSolar offers industry-leading prices for their panels, making them an extremely attractive purchasing option for homeowners.
Why invest in JinkoSolar?
In the past few years, JinkoSolar has grown exponentially as a company. They’ve expanded into new markets and have been able to perform extremely well in the worldwide panels market. If you’re looking to invest in a large and quickly growing company, JinkoSolar could be the right choice for you.
The future of solar stocks
Events in 2022 have had massive effects so far on the solar industry and investments. Gas prices worldwide have increased partially as a result of Russia being hit with a variety of sanctions after their invasion of Ukraine. Overall, more countries across the world have sought to lessen their reliance on fossil fuels and turn to solar and renewable energy companies for solutions. Despite uncertainties, investors should look to companies with diverse product offerings and technologies that set them apart from others.
Invest in clean energy for your home with EnergySage
Using the EnergySage Marketplace to find installers near you is a great way to save money and invest in your future since your own solar system provides a great return on investment. When you sign up, you’ll receive up to seven quotes from installers in your area and be able to choose what fits your home and your budget.
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