Renewable energies are expected to be one of the most attractive sectors for investors in 2021 and beyond. The outgoing Trump administration has adopted a policy of benevolent neglect of renewable energy. But everything is changing. And solar stocks seem to be among the beneficiaries of a more accommodating policy.
However, while many investors look to the United States, they would do well to look to a country further east. And I am not talking about China. In this case, I am talking about India.
India is the biggest consumer of coal. And the conventional wisdom was that any efforts the United States could make to reduce our dependence on fossil fuels would be undermined by mega-polluters like China and India. But this the story changes.
As stated on the website, foreignpolicy.com, “India is experiencing a green energy revolution – exceed targets, break records and quickly make the era of clean, cheap energy a reality.
And solar is a big part of this rebirth. In 2019, India became the third largest solar market in the world with 7.3 GW of solar power installed across the country. And in August 2020, India was four years ahead of schedule to meet its initial target of having a capacity of 20 GW.
And according to the Department for the Promotion of Industry and Internal Trade (DPIIT), new investments in clean energy amounted to $ 11.1 billion in 2018.
That said, quality and scale are important for solar companies you should invest in. And we’re going to take a closer look at three of the best you should take a look at as the timeline sets to change. :
- JinkoSolar Holding Co. (NYSE:JKS)
- Brookfield Renewable Energy Partners (NYSE:BEP)
- First solar (NASDAQ:FSLR)
Solar stocks: JinkoSolar (JKS)
The first of the solar stocks to review is JinkoSolar. Chinese society is one of the largest PV module suppliers in India. All PV modules delivered in the first quarter featured the company’s proprietary mono PERC technology, including full-cell and half-cell modules.
The company manages to increase its market share in the region. This is no small feat given the supply chain pressures caused by the novel coronavirus. The company is also poised to become a major supplier to China and the European Union as they begin to scale up their solar ambitions.
JKS stock has climbed more than 200% in the past three months. The company just posted earnings, and while it did meet revenue expectations, it exceeded earnings expectations. However, both figures were higher than those for the same quarter in 2019.
Despite its sharp price spike over the past three months, the stock is trading at an attractive price-to-earnings ratio of 19.78. For a company with a market cap of $ 2.8 billion, JinkoSolar looks like a smart buy no matter what happens to the US solar market.
Brookfield Renewable Partners (BEP)
For many investors, when they think of BEP stocks, their first thought is hydropower. And for good reason, Brookfield’s network of 5,300 power generation facilities constitutes the majority (65%) of the company’s capacity.
But Brookfield is in the process of making an aggressive pivot to become one of the leading solar companies. The company is confident that over the next decade it will reverse the scenario and generate the majority of its generation capacity through solar power. And a key to this growth is the company’s investment in India.
Brookfield was eyeing the market for several years and finally started making inroads in 2017. At the time, Brookfield recognized that it was behind China in its development of the Indian solar market. This is all the more important given that the cost of installing solar energy has fallen by more than 75% over the past five years.
However, in August, CEO Sachin Shah noted the growth in the company’s solar business. Specifically, the company harnessed 3,000 megawatts of solar power and nearly 10,000 more megawatts were under development.
Premier Solar (FSLR)
As one of the country’s leading solar stocks, First Solar doesn’t come cheap. FSLR shares are currently trading near their annual high. But despite fears that it is hitting the limits of current solar technology, the company is still very healthy.
North America and Europe are the country’s first and second markets, respectively. However, First Solar sells solar modules to third parties and has been developing large-scale PV assets in India since December 2011.
First Solar is the industry leader in thin film solar panels. These panels have been proven to perform best in the hot and humid conditions commonly encountered in India, making them ideal for large scale applications.
The election of Joe Biden will ultimately boost solar demand in the United States. But India is already a strong supporter of the solar arena, and First Solar is well positioned to help India in its green movement.
As of the publication date, Chris Markoch does not have (directly or indirectly) any position in any of the stocks mentioned in this article.
Chris Markoch is a freelance financial writer who has covered the market for over six years. He has been writing for Investor Place since 2019.