Our theme of Solar stocks has performed well over the past three months, increasing over 26% since our last update in early August. The theme also remains up around 23% year-to-date, although it has slightly underperformed the S&P 500 which rose 25% over the same period. The recent recovery comes amid strong demand for solar power and strong quarterly results from some solar companies such as Enphase Energy. There have also been positive developments on the regulatory front. The $ 1 trillion infrastructure bill that was passed earlier this month includes some provisions that could help the solar industry, including investments in grid upgrades. Additionally, the Build Back Better Act – which will have big incentives for the solar industry, including tax credit extensions, is expected to pass shortly. However, the industry has been affected to some extent by the supply chain and on-going workforce issues impacting the economy as a whole, which weighed on the quarterly results of the companies. panel manufacturers such as First Solar (NASDAQ: FSLR) and Solar energy.
Within our theme, Enphase Energy, a company that produces inverters and control systems for solar installations, has been the top performer, increasing their inventory by around 43% since the start of the year. On another side, NextEra Energy, a utility company that has one of the largest solar power generation portfolios, has been the worst performer as its share has risen about 12% year-to-date.
[8/9/2021] Why solar stocks continue to underperform
Solar stocks had a lackluster year, with our theme on Solar stocks down about 3% year-to-date, compared to the S&P 500 as a whole which is up about 18% over the same period. The underperformance arises as investors make profits, after large gains through 2020 (our theme was multiplied by 3 last year) and also due to a larger rotation of growth stocks to higher stocks. choice of value. In addition, supply chain issues following the reopening of Covid-19 are also having a likely impact on the production of some companies. That being said, the fundamentals of the sector remain strong. Sector indicators such as First Solar (NASDAQ: FSLR) – and Enphase Energy posted strong results for the second quarter of 2021, indicating that demand is holding up well. The United States Senate also voted with a large majority to advance the more than $ 1 trillion infrastructure bill that could have long-term benefits for the renewable energy space. Separately, the US government also intends to launch a tool that will allow local agencies to instantly authorize rooftop solar installations, a move that is expected to remove a major source of delays in the rooftop solar industry.
In our theme, NextEra Energy, a utility company that has one of the largest solar power generation portfolios, has been the best performer this year, increasing about 4.5% year-to-date. On another side, Solar energy was the worst performer, dropping around 9.2% in its share year-to-date, due to its mixed results in the second quarter of 2021.
[3/23/2021] Solar stocks have corrected. Is it time to buy?
Solar stocks had a mixed year, with our theme on Solar stocks down about -1.5% year-to-date, compared to the larger S&P 500 which rose about 5% over the same period. There are several reasons for the recent underperformance. Rising bond yields caused a massive sell off in the broader markets and solar stocks have been hit particularly hard since rebounding sharply over the past year. Separately, there has been a recent proposal by utility companies in California – the largest solar market – to cut payments for residential solar systems and that has apparently hit investor sentiment as well. However, it might be a good time to look at these companies. With the Covid-19 stimulus bill now enacted, Democratic lawmakers who control the House and Senate (albeit with a slim margin) are likely to focus on climate-related issues – a key part of the president’s agenda. Biden, potentially beneficial to solar players. Additionally, with rising interest rates and the economy recovering, investors might see the value of solar names in our chart, including the panel producer. First Solar (NASDAQ: FSLR) – which trades at a reasonable multiple – or power electronics players such as SolarEdge and Enphase Energy which have thick margins and differentiated products.
[11/25/2020] Solar stocks have risen sharply, what are the risks?
Solar stocks have performed extremely well this year. Our indicative theme of Solar stocks is up 244% year-to-date, compared to the broader S&P 500 which is up around 11% over the same period. There is a good reason for this. President-elect Joe Biden has pledged to spend around $ 2 trillion to fight climate change, with the goal of making electricity generation carbon neutral by 2035. The adoption of solar power will probably be the key to achieving these goals. Ultra low interest rates also mean that it is quite cheap to finance solar projects. However, are investors taking risks into account? The values of our theme are now traded at very high valuation multiples. First Solar (NASDAQ: FSLR) is trading at around 61 times adjusted 2019 earnings, SolarEdge is trading at around 60x, while Enphase Energy is trading above 140x and demand will need to rise significantly to justify these valuations. Second, while costs have fallen considerably, the industry is still somewhat dependent on favorable legislation to stimulate demand. Things might not go smoothly on that front just yet – as the Democrats have won the White House, their majority in the House of Representatives has shrunk and the Senate will not be decided until the second round of the elections. January.
[Updated 9/3/2020] Enphase, SolarEdge, First Solar: solar stocks about to shine
Solar stocks are back with investors, with our indicative theme of US listed solar stocks – which includes First Solar (NASDAQ: FSLR), Enphase Energy and NextEra among others, up around 71% year-to-date versus around 6% for the S&P 500 as a whole. The theme also outperformed, returning more than 653% since the end of 2017, compared to around 30% in the S&P. While Enphase has been the main driver of returns since the start of the year, up 159%, NextEra Energy posted the smallest gains, up around 17%.
See our United States theme listed Solar stocks for historical performance and yield data from the largest and most relevant names in the US solar industry.
There are several trends that are driving investor interest in solar stocks. First, solar is becoming increasingly viable, as the cost of electricity compares favorably with that of natural gas and other renewable sources. Demand in the United States was also strong, driven by residential and commercial space as well as strong regulatory support, particularly from state governments. In fact, solar power became the largest source of new power generation capacity last year, accounting for around 40% of total capacity additions.  Historically low interest rates could also help the industry, by reducing the costs of financing projects, resulting in increased demand for solar power. Moreover, the broader renewable energy space could outperform if Democratic presidential candidate Joe Biden – who leads the polls – is elected in November. Mr Biden has pledged to spend nearly $ 2 trillion to fight climate change, with the goal of making electricity generation carbon neutral by 2035.
First solar manufactures solar panels which are mainly used in large scale solar farms. Although the company’s revenue has remained almost flat over the past two years due to falling module prices, its strong balance sheet and differentiated thin-film panel technology could help it grow as the market continues to grow. continues to develop. The stock is up about 30% year-to-date.
Enphase Energy – mainly produces components such as inverters and control systems for solar installations. These inverters convert the direct current produced by the solar panels into the alternating current used by the grid and generally control the solar energy system. The stock has significantly outperformed, up 159% year-to-date.
NextEra Energy – the largest US utility by market capitalization, is also the largest owner of solar production capacity outside of China. The company is also betting big on battery storage, with plans to build nearly 700 megawatts of storage projects in California by the end of 2022. The stock is up about 17% this year.
SolarEdge Technologies provides power optimizers, solar inverters and monitoring systems for solar energy systems. While the solar panel industry is relatively commonplace, the components supplied by SolarEdge are more specialized and help to control and collect information from solar power systems. The stock is up 106% year-to-date.
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