Experts already predict the industry will be worth $374 billion by 2029. Investors are shopping around for exposure to the market. All that’s left to figure out is which solar power stocks to buy. So, let’s look at three of the most promising ones.
First Solar Inc. (FSLR)
One of the early deterrents for growth in the solar panel industry was the restrictive cost of production, which translated to high price-per-watt for consumers. In 2009, the price per watt for solar panels was $8.50. Today, that amount has dramatically decreased to $1.90, including installation costs. This massive drop is primarily thanks to companies like First Solar Inc. (NASDAQ:FSLR).
The American-based company produces low-cost solar panels, develops solar farms, and provides other solar energy solutions. FSLR’s thin-film photovoltaic (PV) panels with Cadmium Telluride semiconductor technology enjoy lower product costs and faster manufacturing while maintaining high absorption rates. First Solar’s prized tech has a 250% lower carbon footprint than regular crystalline silicon cells, and 90% of its materials can be recycled, making it a favorite among eco-friendly clients and investors.
Analysts like FSLR for its strong market presence and prospects, and they aren’t shy about recommending it as one of the best solar power stocks to buy right now. The company is building a new Louisiana facility that is expected to increase its manufacturing capacity by more than 30%. Other sites are being expanded, and total capacity is projected to be doubled by 2026. Subsidies from the IRA Act partially offset this heavy spending on infrastructure, but for the most part, FSLR’s financials can sustain its growth.
The company’s latest quarter results reported net sales ended at $801 million, up 57.35% QoQ, while net income per diluted share stands at $2.50. Operating cash flow grew by 133.11% QoQ, and EPS exceeded estimates by 19.62%. With these numbers, First Solar is confident it will meet its 3.4 to 3.6 billion revenue guidance for 2023.
Shoals Technologies Group Inc. (SHLS)
PV panels aren’t the only thing that’s needed for solar power. Electrical balance of systems (EBOS) is the collective term for all the components of a solar power array. This includes wires, disconnect boxes, solar inverters, mounts, switches, and batteries. Companies that produce EBOS, like Shoals Technologies Group Inc (NASDAQ:SHLS) stand to grow as much as PV producers as renewable energy demand skyrockets. SHLS also produces EBOS for electric vehicle chargers, exposing them to the broader EV market. The company has 35 patents for different EBOS components. This includes its proprietary Interconnect Harness System, combiner boxes, mounting solutions, and other accessories.
SHLS is already doing well with the current demands. Revenue shot up from $90.8 million to a record $134.2 million YoY, and EPS ended at a 14.29% surprise. The company has a healthy backlog, and awarded orders went up 34% YoY.
SHLS is on our list of solar stocks to buy because of its innovative offerings. As we know, installation is one of the most significant expenses in going solar. Shoals Technologies’ products simplify the process by reducing wires and required components and keeping everything above ground. With most of the world transitioning to solar energy, there’s a big chance that these easy-to-use components will be at the forefront of the market.
Array Technologies Inc. (ARRY)
Like EBOS, solar tracking systems are essential products. These products automatically position PV panels in solar farms to optimize exposure to the sun. Array Technologies Inc. (NASDAQ:ARRY) provides tracking systems and software for utility-scale solar farms that feed electricity directly into the grid. While a few companies sell solar tracking systems, Array Technologies stands out due to its reliable engineering, 99% uptime guarantees, and customized and efficient installation. The company has 30 years in the industry and has kept up with the changing times well enough. There are also plans to create a new production facility in Albuquerque, NM. Construction is expected to start in 2025.
Despite having strong recommendations as a solar power stock to buy, some analysts are wary of ARRY. For one, the company released mixed results for Q3 2023. EPS exceeded expectations by 111.11%, but reported revenue fell 32% from last year. This has led to ARRY cutting full-year guidance for revenue (from a maximum of $1.725 billion to $1.575 billion), EBITDA (from $295 million to $290 million), and net income per common share (from $1.07 to $1.05). The stock price took a hit because of this latest announcement, gapping down from November 11’s $18.22 close to $15.02 the next trading day. The price further deteriorated to a new 52-week low of $13.34 but is now pushing against its $16 resistance. For some, this downward trend is a red flag. However, this might be a good opportunity to buy one of the best growth-centric solar energy stocks at a steep discount.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.