This article was originally published on this sitehttps://www.investopedia.com/thmb/GZO49WNRADewRckShvFD452UO-w=/680x440/solar_power_plant_143082098-5bfc3afe4cedfd0026c529c5.jpg
The solar energy industry has grown rapidly even as fossil fuels remain the dominant source of global energy use. Solar industry companies come from multiple sectors, including utilities, industrial, and energy, and include popular stocks such as SolarEdge Technologies (SEDG) and SunRun Inc. (RUN). While some large utilities and energy companies have solar and renewable energy divisions, these businesses typically are not included in the industry’s listings because the parent’s primary focus is not solar.
Solar stocks, represented by the Invesco Solar ETF (TAN), have dramatically outperformed the broader market over the past year. TAN has provided a total return of 138.2% over the last 12 months, well above the iShares Russell 1000 ETF’s (IWB) total return of 44.4%. These market performance numbers and all statistics in the tables below are as of June 14, 2021.
Here are the top three solar stocks with the best value, the fastest growth, and the most momentum.
These are the solar stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- SunPower Corp.: SunPower designs and builds solar panels and systems. The company serves residential, business, government, and utility customers.
- First Solar Inc.: First Solar designs and manufactures solar power systems and solar modules. The company utilizes a thin film semiconductor technology to manufacture its solar modules. First Solar announced in late April financial results for Q1 of its 2021 fiscal year (FY), the three-month period ended March 31, 2021. Net income rose 131.2% on revenue growth of 51.0%. Net income was boosted by a one-time $150.9 million gain on the sale of the company’s U.S. project development and North American O&M businesses.
- Daqo New Energy Corp.: Daqo New Energy is a China-based manufacturer of polysilicon used by manufacturers of solar technology products. The company announced in May financial results for Q1 FY 2021, which ended March 31, 2021. Net income attributable to Daqo New Energy shareholders (which excludes non-controlling interests) rose 150.4% on revenue growth of 51.7%. Lower operating expenses compared to the year-ago quarter helped to boost net income.
These are the top solar stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Solar Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Daqo New Energy Corp. (DQ)||68.69||5.1||149.4||51.7|
|First Solar Inc. (FSLR)||79.59||8.5||130.6||51.0|
|Hannon Armstrong Sustainable Infrastructure Capital Inc. (HASI)||53.82||4.2||74.3||26.6|
- Daqo New Energy Corp.: See above for company description.
- First Solar Inc.: See above for company description.
- Hannon Armstrong Sustainable Infrastructure Capital Inc.: Hannon Armstrong is focused on investing in climate change solutions. It provides capital to companies engaged in energy efficiency, renewable energy, and other sustainable infrastructure markets. The company announced in early May financial results for Q1 FY 2021, which ended March 31, 2021. Net income rose 109.8% on revenue growth of 26.6%. Net income received a significant boost from a $54 million gain in income from equity method investments.
These are the solar stocks that had the highest total return over the last 12 months.
|Solar Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|ReneSola Ltd. (SOL)||9.45||0.7||694.1|
|GCL-Poly Energy Holdings Ltd. (GCPEF)||0.16||4.1||529.4|
|Daqo New Energy Corp. (DQ)||68.69||5.1||507.2|
|iShares Russell 1000 ETF (IWB)||N/A||N/A||44.4|
|Invesco Solar ETF (TAN)||N/A||N/A||138.2|
- ReneSola Ltd.: ReneSola is an international renewable energy company that builds and manages energy projects. The company primarily focuses on the development, construction management, and financing of solar power projects. ReneSola announced in late May financial results for Q1 FY 2021, which ended March 31, 2021. Net income attributable to the company was $0.8 million, a significant turnaround from the net loss of $4.4 million in the year-ago quarter. Revenue grew 7.6%.
- GCL-Poly Energy Holdings Ltd.: GCL-Poly Energy is a Hong Kong-based solar photovoltaic company. It supplies photovoltaic materials, such as polysilicon and silicon wafers, and offers solar system solutions. The company also owns several large-scale solar farms globally.
- Daqo New Energy Corp.: See above for company description.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.