Alex Manea
Every 1.5 hours, the earth's surface receives enough sunlight to power the world for a whole year. If that power can be harnessed, it becomes a highly valuable resource with far less environmental ramifications than other sources of energy. Solar energy has the potential to revolutionize how we power our lives.
Investors know the potential of solar energy and are already investing in the sector. Solar panels are only the beginning; other solar equipment such as EV batteries and PV modules are in high demand.
To capitalize on this trend, here are the five best solar energy stocks to buy in 2023.
Before breaking down this year's list of the five best solar stocks, it's important to learn how to buy solar stocks. Let's run through a few key steps.
There are no guarantees with any stock, but you can increase your chances of success by researching potential solar stocks. Look at the company's financials and analyze its competitive strengths and weaknesses. Pay special attention to their balance sheet, cash flow statement, income statement, debt levels and management team.
Although this particular list focuses on solar energy companies, don't limit yourself to one sector. Investigate as many options as possible to find the best opportunities.
Once you have a list of potential solar stocks, decide which ones fit your investment strategy and risk tolerance level. Some investors focus on long-term investments, while others prefer to trade more frequently. Consider whether you're looking for income or capital growth when making your stock choices as well as any tax implications that may arise from investing in solar stocks.
It's time to open a brokerage account and order your stock. All you need to do here is set the order and pay the commission. Your input doesn't stop there, however; it's highly recommended that you continue to monitor your investments and make any necessary changes. Watch out for any news that may impact the stock, such as changes in legislation or a new product launch.
Wondering which brokerage platform to use? Make the most of our free stock broker comparison tool to find the best platform for you.
Now that you know what to do, let's get into this year's list of the five best solar energy stocks. Our list should not be taken as a recommendation to buy, but rather an insight into the solar energy sector.
Keep in mind also that figures are constantly changing. The best investments are made by those who regularly monitor their markets and keep tabs on the latest trends.
As of February 2023, here are some of the top solar industry stocks to consider:
First Solar is an American company that specializes in photovoltaic (PV) modules, or solar panels, which convert sunlight into electricity. It also provides engineering and construction services for PV systems and sells power plants to utility companies around the world.
With a market cap of $17.85 billion, First Solar is one of the largest solar stocks on the market. It's also an industry leader, boasting increasing revenues and strong quarterly earnings. The year-to-date, one-year, and five-year reports all lie in the green for First Solar; the company saw a +14.75% YTD and a 140% boost over the past year.
The major drawcard keeping First Solar ahead of industry competitors is its production of high-performance modules. These thin-film panels are cheaper per watt and more efficient than their silicon counterparts. As such, First Solar has a strong angle keeping its balance sheet in the green.
Established and based in Israel, SolarEdge is a company specializing in the production and sale of photovoltaic inverters. It has a $17.8 billion market cap and an enterprise value of $18.6 billion.
SolarEdge is a highly active player in the solar industry and is known for its innovative technologies and cutting-edge products. Its revenues have increased significantly over the past several years, with an +11.95% YTD and +32% one-year growth rate after a consistent upward trajectory over the past five years.
In recent news, SolarEdge has developed the first software to be approved for use with flexible exports from residential panels. Developments like these keep SolarEdge ahead of the competition and ensure its standing in the market.
Remont, California is home to Enphase Energy – a manufacturer of micro-inverters and energy storage systems with a primarily residential market. The company has been making headlines in the solar sector recently with a new bidirectional EV charger; the system sources power from both the grid and residential panels.
In terms of financials, ENPH has had a slower start to the fiscal year than other solar companies. However, the company has seen a one-year increase of 58.41% and maintains a $30.3 billion market cap.
The electric vehicle market isn't likely to take a nosedive any time soon, so it's a positive sign that Enphase Energy develops heavily in that arena.
Sunrun Inc has been in operation since 2007 and currently provides photovoltaic systems to residential areas, as well as energy storage products. The company is reportedly teaming up with Lunar Energy Inc for a virtual power plant (VPP) project, Gridshare.
The past 12 months has seen a 10.88% boost for Sunrun – lower than other comparable companies, but still a net positive. The company has a market cap of $5.75 billion and a price-to-earnings (P/E) ratio of 91.09.
VPP systems are in the spotlight right now as more residential areas require smarter grid systems to regulate solar power supply. In that case, Sunrun's partnership with Lunar Energy Inc has the potential to reflect positively on its balance sheet.
Chinese corporation Daqo New Energy is a frontrunner in the production of monocrystalline silicon and polysilicon. The company is an active contributor to China's 'solar panel boom,' as the products it manufactures are required for solar photovoltaic systems.
Daqo started the year strong in 2023 with a 7.86% increase as of early February. Over the past twelve months, the company has seen a modest boost of +15% and now has a market cap of $3.23 billion.
Investing in solar energy stocks is becoming increasingly popular as the demand for renewable energy rises. It isn't just climate change prompting the shift to renewable energy; fossil fuels are a finite resource, so companies and governments are looking for alternatives that are cheaper and more sustainable.
The companies listed here in our top five are just a few examples of the many solar energy stocks that can be invested in. Investing in a sound company is always wise, so take your time to research and compare companies before investing. Do not take our observations as financial advice, but rather, use them as a starting point for your own research.
Ready to invest? Don't forget to check out our resources for investors so you can make a balanced and informed decision.
While every stock is somewhat of a risk, solar stocks have had an impressive run in recent years. The demand for renewable energy is rising, and solar stocks are likely to continue this trend as the world moves toward a greener future.
The best solar power stock to buy depends on your personal investment goals. Do research and compare companies before investing, as no stock is a sure thing. We have observed five of the strongest contenders in 2023: First Solar, SolarEdge Technologies, Enphase Energy, SunRun Inc, and Daqo New Energy Corp.
Investopedia identifies JinkoSolar Holding Co as the biggest solar company in 2023; however, figures change constantly, so it's best to research the market regularly. The companies highlighted in this article as well as Canadian Solar Inc, SunPower Corp, and Array Technologies Inc are good options to watch.
