Solar energy was already on track to become a major growth industry over the next decade. It really started once President Joe Biden took office. Biden immediately set a goal for the United States to produce 100% carbon-free electricity by 2035. He also extended significant tax credits and subsidies to accelerate the country’s transition to carbon-free sources. renewable energy. Since then the medium the cost of gas rose to over $5 a gallon. This will likely add to the urgency for the country to accelerate the transition. That said, let’s dive into the three best solar stocks to buy in 2022.
Best Solar Stocks To Buy Now
No. 3 Enphase Energy (Nasdaq: ENPH)
Enphase Energy is an energy technology company that focuses on solar generation, home energy storage, and online monitoring and control. It is one of the best solar stocks to buy in 2022, mainly due to its outstanding performance in 2021.
In fiscal 2022, Enphase Energy reported annual revenue of $1.38 billion and net income of $333.7 million. These figures increased by 78% and 109% respectively. This performance marked a record year of profitability for Enphase Energy. He carried that momentum through 2022 so far. In the first quarter, it reported revenue of $441 million and net profit of $51.8 million. These figures increased by 46% and 86% respectively.
To date, Enphase Energy has sold over 2 million systems in 135 countries.
No. 2 First Solar (Nasdaq: FSLR)
First Solar is one of the best solar stocks to buy due to a recently discovered competitive advantage.
Over the past year, COVID-19 has ravaged global supply chains. This, combined with record inflation, is driving massive price increases for commodities such as aluminum and lithium. Many companies rely on these raw materials to manufacture their products. For them, these price increases are a huge obstacle to overcome. first solar, on the other hand, uses cadmium telluride to produce its panels. It is one of the few companies to use this resource.
The use of cadmium telluride was already a competitive advantage for First Solar. Indeed, First Solar’s cadmium telluride panels are much easier to manufacture. First Solar can produce CdTe panels in hours while using only 2% of the semiconductor materials used in traditional panels. This means that it does not rely on raw materials like aluminum and polysilicon.
This unique product is actually nothing new. First Solar has been developing it for over 20 years. But it’s the economic moment that ultimately turns First Solar’s use of CdTe into a huge advantage. Other companies will face rising material costs while First Solar can take advantage of a material with much lower demand.
The best No. 1 Tesla solar stocks (Nasdaq: TSLA)
Most investors tend to focus on from Tesla Vehicles. Each quarter, the main discussion revolves around the number of electric vehicles produced and delivered by Tesla. This intense focus makes it easy to forget that Tesla actually has other product lines. Tesla isn’t just a leading electric vehicle stock. It’s also one of the best solar stocks out there. Currently, Tesla sells two solar products: solar roofs and solar panels.
Tesla’s solar roof is like a gigantic solar panel. Instead of mounting heavy solar panels on your roof, Tesla will simply replace the entire roof with a single sheet of durable solar tiles. Tesla has installed 400,000 solar roofs to date. That’s the equivalent of 10 million traditional solar panels, which Tesla also sells. In addition to the roof and solar panels, Tesla also sells an energy storage product called Powerwall.
Powerwall acts as a solar-powered backup generator for homes. It gives solar-powered homes the assurance that they won’t lose power during a storm. In Q1, deployments for Powerwall grown up by 90%. Management said the demand for this product is greater than what Tesla can currently produce. It is limited by bottlenecks in the supply chain. In general, “too much demand” is a good problem to have. The Powerwall could become a major growth area once Tesla can ramp up production.
In contrast, Tesla’s solar deployments were down 48% in the first quarter. Tesla attributed the decline to import delays that were beyond its control.
Tesla does not directly report its solar revenue. However, it reported total first-quarter revenue of $18.7 billion. Of that amount, it allocated $16.8 billion to electric vehicles. That leaves $1.9 billion remaining that we can assume comes from solar and other products.
As mentioned, most investors don’t view Tesla as one of the top solar stocks. This is mainly because its core business is electric vehicles. Despite this, Tesla has one huge advantage over most solar companies: size.
As this is a young industry, many solar companies are still in a fairly young growth stage. They are trying to raise funds and establish their market share. Tesla, on the other hand, made $53 billion in revenue in 2021. It also made $5.52 billion in net income. It’s just free cash flow that Tesla can directly reinvest in its business. On top of that, Tesla already has engineers, factories, and huge supply chains in place for manufacturing. Additionally, much of the technology used by Tesla for electric vehicles can be repurposed for its solar products.
Tesla is reaching a size where it can start introducing new product lines and instantly become a major competitor. It’s a bit like when Amazon introduced AWS in 2006. Until then, Amazon was still just an e-commerce company. But, he had top talent, good leadership and cash flow that set him up for success. Today, it dominates cloud computing. Over the next decade, Tesla is able to do the same for solar power, batteries and storage.
I hope you found this article helpful in learning more about the three best solar stocks to buy. Remember that I am not a financial adviser and simply offer my own research and commentary. As usual, please base all your investment decisions on your own due diligence.
A graduate of the University of Miami, Teddy studied marketing and finance while playing four years on the football team. He has always had a passion for business and has used his experience from a few personal projects to become one of the top rated business writers on Fiverr.com. When he’s not pounding words on paper, you can find him pounding notes on the piano or traveling to a random location.