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 an exchange-traded fund (ETF)—the Invesco Solar ETF (TAN)—have significantly underperformed the broader market over the past year. TAN has provided a total return of -5.7% over the last 12 months, behind the Russell 1000’s total return of 8.2%. These market performance numbers and all statistics in the tables below are as of March 8, 2022.
Here are the top three solar stocks with the best value, the fastest growth, and the most momentum. Note that we include earnings per share (EPS) growth for the growth stocks section because most of the rally in natural gas has happened recently. As a result, the growth measure, which only looks at the most recent quarter, will show movement first, whereas in the list of stocks we looked at, many of them still didn’t have positive earnings over a 12-month trailing period. Gas has spiked in price since the Russian invasion of Ukraine because Russia is a major gas producer and has since been subject to major sanctions.
These are the solar stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The price-to-sales ratio shows how much you’re paying for the stock for each dollar of sales generated.
|Best Value Solar Stocks|
|Price ($)||Market Capitalization (Market Cap) ($B)||12-Month Trailing P/S Ratio|
|Daqo New Energy Corp. (DQ)||51.31||3.8||5.2|
|First Solar Inc. (FSLR)||79.52||8.5||18.2|
|Canadian Solar Inc. (CSIQ)||36.40||2.2||31.1|
- Daqo New Energy Corp.: Daqo New Energy is a China-based solar energy company that manufactures polysilicon for sale to manufacturers of solar cells and modules.
- First Solar Inc.: First Solar provides solar panels, photovoltaic power plants, and related services such as construction, maintenance, and recycling of these products. The company utilizes a thin film semiconductor technology to achieve enhanced efficiency and sustainability in its solar modules. First Solar’s Q4 2021 ended Dec. 31, 2021. For that period, the company reported 13.5% year-over-year (YOY) improvement to net income on 48.9% net sales growth. International project sales and increased module sales were primary drivers of growth.
- Canadian Solar Inc.: Canadian Solar Inc. is a Canada-based solar product developer that designs, builds, and sells modules for residential, commercial, and industrial customers. The company’s products include solar modules, inverters, and system kits. On March 8, Canadian Solar announced that it had signed two 10-year power purchase agreements with Axpo Italia. Together, the agreements allot for the purchase of 70% of energy produced by two solar power plants under development totaling 84 MWp. This development makes Canadian Solar the largest solar developer in Italy.
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 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 figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest Growing Solar Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Canadian Solar Inc. (CSIQ)||36.40||2.2||246.7||34.5|
|SolarEdge Technologies Inc. (SEDG)||328.91||17.4||124.2||54.1|
|Daqo New Energy Corp. (DQ)||51.31||3.8||103.1||59.7|
- Canadian Solar Inc.: See above for company description.
- SolarEdge Technologies Inc.: SolarEdge Technologies is an Israel-based company that builds and distributes equipment and technology for photovoltaic arrays. The company provides optimization services as well as monitoring solutions for photovoltaic systems.
- Daqo New Energy Corp.: See above for company description.
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 (%)|
|JinkoSolar Holding Co. Ltd. (JKS)||54.94||2.6||44.3|
|SolarEdge Technologies Inc. (SEDG)||328.91||17.4||33.3|
|Enphase Energy Inc. (ENPH)||175.99||23.6||33.3|
|Invesco Solar ETF (TAN)||N/A||N/A||-5.7|
- JinkoSolar Holding Co. Ltd.: JinkoSolar is a Chinese holding company that produces solar cells, modules and other materials related to solar energy. The company serves customers in China, the U.S., Europe, the Middle East, and South America. In late January, JinkoSolar’s principal operating subsidiary, Jinko Solar Co., Ltd., completed an initial public offering and began trading on the Shanghai Stock Exchange under the ticker 688223:CH.
- SolarEdge Technologies Inc.: See company description above.
- Enphase Energy Inc.: Enphase Energy is a global energy technology company that brings solar, batteries, and software together in one complete package. It supplies microinverter-based, solar-plus-storage systems. On Feb. 14, Enphase announced it had partnered with renewable energy and grid solutions provider Swell Energy Inc. The partnership is expected to enhance solar and battery access and choice for energy users while delivering critical resources to the local grids in California, New York, and Hawaii.
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