4 best solar stocks to buy before Biden’s aggressive energy plans


Solar stocks could have a very lucrative 2022 year. Among the various sources of renewable energy, solar appears to have significant adoption potential.

One of the main reasons is the sharp drop in the cost of solar energy. It is estimated that the the cost of solar energy has fallen by 70% over the past decade. Even with this positive factor, solar energy only accounts for 3% of electricity production in the United States. That is subject to change and solar stocks are worth considering for the long term portfolio.

To put it in perspective, the Biden administration has an ambitious plan for adopting solar power. The Ministry of Energy believes that solar energy can represent 40% of American electricity by 2035. In addition, solar energy is likely to represent nearly half of the country’s electricity by 2050.

Given the ambitious goal of adopting solar energy, solar stocks should remain in the limelight. Importantly, solar companies may see accelerated growth over the next several years as the administration pushes for wider adoption of solar power.

So let’s take a look at four attractive solar stocks that may benefit from favorable industry winds.

  • First solar (NASDAQ:FSLR)
  • Canadian solar (NASDAQ:CSIQ)
  • SunPower (NASDAQ:SPWR)
  • Enphase Energy (NASDAQ:ENPH)

4 best solar stocks to buy: First Solar (FSLR)

Source: Igor Golovniov / Shutterstock.com

FSLR stock has been sideways since the start of 2021. Given the looming industry growth, the stock looks attractive with a futures price / earnings ratio of 25.0.

As of December 2020, First Solar had an expected module order book of 10.8 GW. The backlog has increased to 17.1 GW in July 2021. In addition, the company has 9.2 GW of mid to late stage opportunities. This provides clear visibility into revenue and cash flow.

First Solar is also undertaking a 3GW expansion in Ohio with production expected to begin in the first half of 2023. Additionally, the company expects the 3GW expansion in India to be completed by the end of the year. 2023. These factories should have a lower environmental footprint and lower expected cost per watt.

With cash and cash equivalents of $ 2.1 billion, the company is well positioned to invest in the expansion. First Solar also plans to end 2021 with a cash balance of $ 1.4 billion. The company is therefore fully funded for the next 12 to 18 months.

Overall, the FSLR share seems attractive after having been in the consolidation phase. The company has a healthy balance sheet and its expected module deliveries appear to be accelerating. A bullish breakout looks likely with favorable industry winds.

Canadian Solar (CSIQ)

A Canadian Solar (CSIQ) exhibit booth at a convention in Bangkok, Thailand.

Source: Shutter B Photo / Shutterstock.com

Another interesting name among solar stocks is CSIQ stock. For the current year, the stock is down 32% and it looks like a good buying opportunity.

For the second quarter of 2021, Canadian Solar reported revenue of $ 1.4 billion, a 106% year-over-year increase. It should be noted that for 2020, the company had reported deliveries of 11.3 GW modules. For the current year, module deliveries are expected to be between 16 and 17 GW.

Therefore, revenue growth is expected to remain strong.

From a balance sheet perspective, the company reported cash and cash equivalents of $ 814 million in the second quarter of 2021. Its leverage was relatively high at 3.8. However, with healthy EBITDA, debt servicing is expected to remain smooth. With the module shipping pipeline providing clear visibility into EBITDA, debt servicing shouldn’t be a problem.

It should also be noted that Canadian Solar has declared a module capacity of 16.1 GW as of 2020. By the end of 2021, the company expects that capacity to increase to 22.7 GW. This positions the company for further revenue growth in 2022.

I also like the fact that Canadian Solar is well diversified geographically. For 2020, the company reported sales of 35% in America, 47% in Asia, and 18% in Europe and others.

Overall, CSIQ stock looks attractive even with geopolitical and regulatory headwinds.

Best solar actions: SunPower (SPWR)

a phone with the sunpower logo in front of an American flag

Source: Igor Golovniov / Shutterstock.com

SunPower is a provider of solar solutions in the residential and light commercial segment. Like most solar stocks, SPWR’s stock declined sideways in 2021.

However, the trend in activity remains positive and the title is about to reverse in the coming quarters.

The residential segment is expected to remain a key growth engine for SunPower. For the second quarter of 2021, the company recorded 67% year-over-year growth in residential bookings. During the quarter, the company 13,000 new customers added. The company has a healthy total installed base of 376,000 customers.

SunPower estimates that with the adoption of the 30% investment tax credit, solar energy will likely be cheaper than residential utility tariffs by 2026. Therefore, there is a large addressable market. considering the cost advantage.

In addition, the growth of the electric vehicle industry in the United States is another catalyst. The company already has a partnership with Wallbox as a privileged partner of solar installations and recharging.

From a financial perspective, the company reported adjusted EBITDA of $ 22 million for the second quarter of 2021. For the comparable quarter of the previous year, the adjusted EBITDA loss was $ 4 million. As the EBITDA margin improves, the stock is expected to rise.

Overall, SunPower currently has 500 MWH of FTM storage projects under contract or underway. With the increasing adoption of solar power, the pipeline is expected to remain robust. The stock of SPWR is therefore worth accumulating.

Enphase Energy (ENPH)

mobile phone screen with the energy logo inphase on it to represent renewable energy stocks

Source: Igor Golovniov / Shutterstock.com

ENPH stock appears to be an attractive name with a focus on the residential solar segment. Recently, Key bank analyst Sophie Karp initiated a blanket with a “Overweight”Note on action. KeyBanc has a price target of $ 179 for the stock, which implies a potential rise of around 15% from its current price of $ 158.

In summary, Enphase is one of the leading microinverter companies. By June 2021, the company had shipped more than 182 MWh of its energy storage system.

It should be noted that in 2020 the company had a solar addressable market of $ 4.1 billion. With new products in the pipeline, the company believes that the addressable market will grow to $ 14.1 billion by 2023. This will provide sufficient leeway for revenue growth.

For the second quarter of 2021, Enphase reported 152% revenue growth to $ 316.1 million. For the same period, the gross margin was 40.4% and increased 190 basis points year-on-year. Obviously, growth has been robust and this explains the fact that ENPH stock is trading at premium valuations.

In June 2021, the company reported cash and cash equivalents of $ 1.3 billion. This provides flexibility to pursue aggressive growth and product innovation.

Additionally, for the first half of 2021, the company reported operating cash flow of $ 144.1 million. As the cash flow picks up, the stock is about to rise.

At the date of publication, Faisal Humayun had (directly or indirectly) no position in any of the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.

Faisal Humayun is a senior research analyst with 12 years of experience in credit research, equity research and financial modeling. Faisal is the author of over 1,500 stock-specific articles focusing on the technology, energy and commodities industry.


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