- Enphase Energy (NASDAQ:ENPH): Strong growth in the residential solar market and market share gains continue to drive revenue growth.
- SolarEdge Technologies (NASDAQ:SEDG): serves a range of solar market segments, including residential, commercial and small-scale solar installations.
- Sun Power (NASDAQ:SPWR): Strong residential demand led to its largest ever backlog.
With Crude Oil is still trading above $100 a gallon, market players eye solar energy stocks.
As an affordable source of energy, the solar industry will play a key role to meet the world’s energy needs throughout this decade. Fortune Business Insights estimate that through 2028. the solar industry will grow at a compound annual growth rate (CAGR) of 6.9%.
In addition, federal clean energy policies should provide further tailwinds for the solar industry. For example, dozens of House Democrats recently called out President Joe Biden relaunch negotiations on the climate aspects of the Building back better legislation.
According to trade group data Solar Energy Industries Association, installed solar capacity in the United States is over 121 gigawatts (GW), enough to power 23.3 million homes. Solar power accounted for nearly half of all new power generation capacity added in 2021.
Meanwhile, the United States is not alone in its growing emphasis on alternative energy. Europe strives to become the world’s first climate-neutral continent by 2050. In 2020, renewable energies represented 22% of all energy consumed in the European Union (EU). In addition, solar energy is the fastest growing source of energy.
With that information, here are details on the three pure-play solar stocks that could generate lucrative returns in 2022.
Solar stocks should shine: Enphase Energy (ENPH)
- 52 week range: $108.88 – $282.46
Based in Fremont, CA Enphase Energy provides home energy management solutions that combine solar generation, energy storage and monitoring solutions. Besides, through the Acquisition of Clipper Creek, it added electric vehicle (EV) charging services.
Enphase issued fourth quarter 2021 results February 8. Revenue grew 56% year-over-year (YOY) at a record $413 million. Non-GAAP net income jumped up to $103 million, or 73 cents per diluted share, from $71 million in the quarter of the previous year. Cash and cash equivalents ended the quarter at $1 billion.
Management expects first-quarter revenue to be between $420 million and $440 million. Enphase also buys SolarLeadFactory, which provides high-quality leads to solar installers. This acquisition adds lead generation capabilities to the company’s toolset.
ENPH stock has increased by 21% over the past year. The shares are trading at 55.9 times forward earnings and 17.7 times trailing sales.
These high multiples for the solar energy name mean that investors could wait for a drop in prices before hitting the “buy” button in ENPH. During this time, tthe 12-month median price forecast for Enphase Energy Stock is $220.
SolarEdge Technologies (SEDG)
- 52 week range: $199.33 – $389.71
Based in Israel SolarEdge Technologies produces energy optimizers and solar inverter systems. These help to minimize the cost of energy generated by its devices.
Release of SolarEdge Q4 2021 results February 15. Revenue jumped up 54% year-on-year to $552 million. Non-GAAP net income was $62.8 million, or $1.10 per diluted share, compared to $55.7 million in the year-ago quarter. Cash and cash equivalents ended the period at $548 million.
Focusing on low-cost power optimizers has helped SolarEdge gain market share over the past two years. Additionally, the growing adoption of its technology by utilities continues to drive revenue growth.
SEDG stock is on the rise 15% in the last 12 months. Shares trade at 50.5x forecast earnings and 9.1x dragging Sales. The 12-month median price forecast for SolarEdge Technologies stock is $336.50.
Solar stocks should shine: Sun Power (SPWR)
- 52 week range: $14.00 – $35.09
SunPower, based in San Jose, Calif., is a vertically integrated solar module manufacturer, focused on the sale and financing of solar panels.
Sun Power announcement Q4 2021 results February 16. Revenue increased 13% year-on-year to $385 million. Non-GAAP net loss narrowed to $13 million, or a loss of 7 cents per diluted share, from $26 million in the year-ago quarter. Cash and cash equivalents ended the quarter at $127 million.
The company recently agreed to sell its commercial and industrial activity for TotalEnergies (NYSE:TTE) for $250 million. TotalEnergies is currently SunPower’s majority shareholder, holding a 50.8% stake in the company.
Management now wants to develop activity in the residential sector after its the acquisition of Solar Crow Blueone of the leading providers of residential solar energy in the United States.
SPWR stock is down about 35% more the last 12 months. Still, the stock price has jumped 50% since the 52-week low of $14 set on Feb. 24.
The shares are trading at 75.8x forward earnings and 2.7x trailing sales. Finally, the 12-month median price prediction for SPWR Stock is $19.50.
At the date of publication, Tezcan Gecgil did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.