Since governments worldwide have been taking several steps to transition their nations to a renewable energy-based future, it’s no surprise that solar energy has been at the forefront of the revolution, given its relatively lower storage costs. Investors’ optimism about the solar industry’s growth prospects is evidenced by the Invesco Solar ETF’s (TAN) 23.5% gains over the past month compared to SPDR S&P 500 Trust ETF’s (SPY) 6.8% returns.
Furthermore, the Solar Energy Industries Association (SEIA) recently announced its one-of-a-kind DEIJ Certification Program that aims to provide training and support for companies to analyze their DEIJ practices. This is expected to support the industry’s growth. The U.S. solar market is expected to hit $22.9 billion by 2025. Also, small-scale solar capacity systems in the United States are expected to grow by 5.8 GW and 7.8 GW in 2021 and 2022, respectively.
Given this backdrop, we think it could be wise now to consider taking positions in solar stocks Enphase Energy, Inc. (ENPH), SunPower Corporation (SPWR), Sunnova Energy International Inc. (NOVA), and ReneSola Ltd (SOL), which gained more than 35% in price last month.
Enphase Energy, Inc. (ENPH)
ENPH, together with its subsidiaries, designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. The company has revolutionized the solar industry with its micro inverter-based technology. ENPH is based in Petaluma, Calif.
On October 25, 2021, ENPH launched its all-new Enphase Energy System with IQ8 solar microinverters for customers in North America. Badri Kothandaraman, president and CEO of ENPH said, “Now, with IQ8, homeowners can realize the true promise of solar—to make and use their own power. IQ8 solar microinverters can provide Sunlight Backup during an outage, even without a battery.”
ENPH’s non-GAAP revenue increased 96.9% year-over-year to $351.52 million in its fiscal third quarter, ended September 30, 2021. Its non-GAAP operating income came in at $85.93 million, up 96.8% year-over-year. While its non-GAAP net income increased 101.5% year-over-year to $84.16 million, its non-GAAP EPS was $0.60, up 100% year-over-year.
Analysts expect ENPH’s revenue and EPS to increase 76.5% and 66.4%, respectively, year-over-year to $1.37 billion and $2.28in fiscal 2021. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock gained 54% in price in October. Over the past nine months, the stock has gained 23.4% to close yesterday’s trading session at $237.61.
SunPower Corporation (SPWR)
SPWR delivers solar solutions worldwide. It operates through Residential, Light Commercial; Commercial and Industrial Solutions; and other segments. The San Jose, Calif.-based concern offers the only solar-plus-storage solution that gives customers control over electricity consumption and resiliency during power outages.
On October 5, 2021, SPWR acquired Blue Raven Solar, one of the fastest-growing residential solar providers in the U.S. Peter Faricy, CEO of SunPower, said “SunPower and Blue Raven share a vision of powering the world with affordable, resilient, sustainable energy. This acquisition will enable us to bring the most powerful and efficient solar technology available to a new set of homeowners and accelerate our growth strategy.”
SPWR’s total revenues increased 41.9% year-over-year to $308.93 million for the second quarter, ended July 4, 2021. Its gross profit increased 137.9% year-over-year to $61.03 million. Also, its total current assets were $1.06 billion for the period ended July 4, 2021, compared to $790.32 million for the period ended January 3, 2021.
For its fiscal year 2021, SPWR’s revenue and EPS are expected to grow 26% and 500%, respectively, year-over-year to $1.42 billion and $0.28. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Also, the stock gained 48% in price in October. Over the past year, the stock has gained 93.4% to close yesterday’s trading session at $32.57.
Sunnova Energy International Inc. (NOVA)
NOVA in Houston, Tex., together with its subsidiaries, provides residential solar and energy storage services in the United States. The company offers operations and maintenance, monitoring, repairs and replacements, equipment upgrades, on-site power optimization, and diagnostics services.
On October 27, 2021, William J. Berger, CEO of NOVA, said, “As more equipment manufacturers enter our rapidly growing industry and broaden their equipment offerings, it has become clear that consumers require a service provider who integrates all of the capabilities and technological advancements into a simple, seamless, and integrated energy system that is backed up with quick and efficient service—and that is who Sunnova is. Our vision is to be a wireless power provider and it is our goal to electrify the home for our customers so that they have the freedom to live life uninterrupted.”
For the third quarter, ended September 30, 2021, NOVA’s revenue increased 37.3% year-over-year to $68.90 million. Its total current assets came in at $717.69 million for the period ended September 30, 2021, compared to $456.67 million for the period ended December 31, 2020. Also, its total assets were $5.06 billion, compared to $3.59 billion for the same period.
NOVA’s revenue is expected to grow 50.5% year-over-year to $242.05 million in its fiscal 2021. Its EPS is expected to grow 58.5% in the current year and 113.4% per annum over the next five years. Moreover, the stock surged by 35.3% in price in October. Over the past year, the stock has gained 58.8% to close yesterday’s trading session at $41.33.
ReneSola Ltd (SOL)
SOL, through its subsidiaries, develops, builds, operates, and sells solar power projects in the United States and Europe. It operates through three segments: Solar Power Project Development, EPC Services, and Electricity Generation Revenue. SOL is based in Yaozhuang Town, China.
On October 25, 2021, SOL announced a collaborative agreement with Terra Aurea Gela S.r.l to co-develop ground-mounted solar projects in Italy. Yumin Liu, ReneSola Power’s CEO, added, “The co-development agreement with Terra Aurea Gela aligns with our growth strategy, enabling us to expand our project development activities in Italy. We look forward to pursuing other opportunities to co-develop projects across Europe.”
SOL’s gross profit increased 52% year-over-year to $11.3 million for its fiscal second quarter, ended June 30, 2021. The company’s net income was $6.95 million, up 125.2% year-over-year. And its income from operations came in at $7.29 million, up 59.7% year-over-year.
Analysts expect SOL’s revenue to be $134.65 million in its fiscal year 2022, representing a 46.5% year-over-year rise. In addition, the company’s EPS is expected to increase 52.4% year-over-year to $0.32 in the next year. Also, it surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock surged by 35.3% in price in October. Over the past year, the stock has gained 159.8% to close yesterday’s trading session at $8.99.
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ENPH shares were trading at $235.71 per share on Wednesday afternoon, down $1.90 (-0.80%). Year-to-date, ENPH has gained 34.33%, versus a 24.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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