3 solar stocks Wall Street says could rise 50% or more

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After soaring last year, renewable energy stocks have seen some correction this year. Solar stocks were no exception. Residential solar installer Sunrun‘s (NASDAQ: RUN) the stock is at 44% of its high while Sunnova Energy International (NYSE: NOVA) the stock is at 35% of its high this year. Likewise, specialist in solar components Array technologies (NASDAQ: ARRY) the stock is at 45% of its high price in 2021. Analysts, however, see 50% or more rise in each of the three stocks. Let’s see if these solar stocks can reach the levels expected by analysts.

1. Sunrun: 50% increase expected

The analysts’ average price target of $ 80.20 for Sunrun is nearly 50% higher than its current price. Indeed, there are reasons to be optimistic about Sunrun. As the largest residential solar installer in the country, Sunrun’s scale and experience gives it an edge over others in the segment. The company has more than 550,000 customers – the highest of all residential solar installers – and continues to expand its customer base.

Image source: Getty Images.

Sunrun generates recurring revenue from its customers typically over a 20 to 25 year period because it leases facilities rather than selling them up front. Residential solar energy market penetration is currently less than 3%. So there is a huge untapped market for the company. Additionally, batteries and power management solutions provide upselling opportunities for Sunrun.

On the other hand, the company’s sales and marketing expenses are on the rise, suggesting that customer growth does not come easily. The residential solar installation market is highly competitive and fragmented. Besides other solar installers, the company’s main competition is traditional utilities. Yet given the huge untapped market and growing consumer appetite for renewables, the business is expected to grow slowly and steadily over the next several years.

Notably, despite falling 46% from its peak, Sunrun stock is up 250% in one year. While Sunrun’s long-term outlook is promising, a 50% increase by the year in a year looks a bit bullish after the stock run last year.

2. Sunnova Energy: 53% increase expected

Like Sunrun, analysts are predicting a nice rise for fast-growing new player Sunnova Energy Energy. Sunnova increased its revenue by 22% last year, far more than Sunrun’s 7% growth. In the first quarter of 2021, Sunnova added 8,900 new customers, bringing its total customer base to 116,400. First quarter revenue increased 38% year-on-year, supported by customer growth.

A stack of wads of money.

Image source: Getty Images.

A huge and untapped market coupled with supporting government policies are expected to support Sunnova’s growth in the years to come.

However, like Sunrun, Sunnova Energy also faces high customer acquisition costs. The company’s general and administrative expenses increased in the first quarter, in part due to personnel costs to support growth. For this reason, a 53% rise, after the stock’s 168% rise in the past 12 months, seems a bit too bullish.

3. Array Technologies: 53% increase expected

There’s a lot to like about Array Technologies, one of the leading manufacturers of trackers used in large solar projects. These trackers move solar panels during the day based on the movement of the sun, increasing their energy production by up to 25%. Demand for the company’s products is high and Array increased its revenue by 35% in 2020. The company’s adjusted EBITDA increased by 32%.

Aerial view of the solar power plant.

Image source: Getty Images.

Array Technologies is already profitable and generated a net profit of $ 59 million in 2020. The company, which went public in October last year, made a secondary offering in March, causing the price to drop sharply. action. However, in a recent presentation, the company stressed that it does not need additional equity to grow its business.

Array Technologies’ performance and growth prospects appear impressive so far. The stock is down 19% from its price after its October listing. It’s no surprise that analysts are bullish on the stock.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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