With the introduction of the federal solar investment tax credit (ITC), which provides a 26% tax credit for systems installed in 2020 – 2022, more homeowners have been encouraged to install solar panels. Although supply constraints in critical components, such as copper, semiconductors, and other metals, have affected installations, higher demand driven by the residential home renovation boom should keep prices high.
According to the U.S. Solar Market Insight report for the second quarter of 2021, the U.S. solar market exceeded 100 gigawatts of installed electric generating capacity, thereby doubling the industry’s size over the past 3.5 years. Moreover, the Biden administration’s net-zero carbon emission goals should bolster the industry’s growth further. The global solar energy market is projected to reach $223.3 billion by 2026, registering a 20.5% CAGR.
Thus, Wall Street analysts are hopeful about the upside potential of several fundamentally sound solar stocks. The consensus price targets for Sunrun Inc. (RUN) and Beam Global (BEEM) indicate a potential upside of more than 50% in the coming months.
Sunrun Inc. (RUN)
RUN is one of the leading home solar panel and battery storage companies. The San Francisco, Calif.-based company offers solar energy systems and products such as solar leads, panels, and racking to mainly residential homeowners. In addition, it provides rechargeable solar battery systems, custom solar designs, and personalized services.
In August, RUN launched a new program, “PowerU,” to train its employees and upgrade their skills to make them more efficient and abreast of the rapidly growing clean energy industry. This should enable the company to improve its operational efficiency and witness sustainable long-term growth.
Also, in August, RUN and Self-Help Enterprises installed a new 138 kilowatts solar system, the “Sand-Creek.” The system can provide efficient solar energy to 60 affordable rental homes and save approximately $50 on monthly bills.
In May, RUN partnered with Ford Motor Company (F) to run Ford Intelligent Backup Power installation. RUN-enabled easy installation of the 80-amp Ford Charge Station Pro and home integration system will serve as a home backup energy source during a power cut.
RUN’s total revenue for the second quarter, ended June 30, 2021, increased 121.3% year-over-year to $0.4 billion. The company’s net earning assets stood at $4.5 billion. RUN’s customer agreements and incentive revenue increased 107% from the year-ago value to $219.5 million. In addition, its solar energy systems and product sales revenue increased 142% from the prior-year quarter to $181.7 million.
Analysts expect RUN’s revenue for its fiscal year 2021 to be $1.55 billion, representing a 68.6% year-over-year growth. The company’s EPS is expected to increase 65.1% in the current year. Moreover, the stock has gained 6.8% in price over the past three months.
All 10 Wall Street analysts that have provided ratings for the stock rated it Buy. Closing yesterday’s trading session at $47, the average analyst price target of $78.10 represents a 66.2% potential gain.
Beam Global (BEEM)
BEEM in San Diego, Calif., is a cleantech leader that produces patented infrastructure products for the electrification of transportation, energy security, and outdoor media. Its product portfolio includes EV ARC (electric vehicle autonomous renewable charger), Solar Tree DCFC, and EV RC DCFC. The company operates in 121 countries and 13 U.S. states.
In August, BEEM announced that a Chinese patent had been granted for its compact transportation configurable EVC ARC system. This should enable the company to explore new international expansion opportunities because the patent will protect its IP in China and Europe.
Also, In August, the City of Racine in Wisconsin deployed BEEM’s EV ARC solar-powered EV charging system for City fleet electric vehicles. Since this supports zero-emissions charging, more state and local agencies could adopt its ready-to-deploy sustainable EV charging solutions.
For the second quarter, ended June 30, 2021, BEEM’s revenue increased 46% year-over-year to $2.12 billion. The company’s pipeline sales increased by 50% to $75 million during this period. Its cash stood at $25.31 million, while its working capital came in at $28.18 million as of June 30, 2021. BEEM’s interest income amounted to $2,000.
BEEM’s revenue is expected to increase 109.5% year-over-year to $22.04 million in its fiscal year 2022. In addition, the company’s EPS is expected to increase by 12.8% next year. Over the past year, the stock soared 104.2% in price.
Of the four Wall Street analysts that have provided ratings for the stock, two rated it Buy. The $46 consensus price target represents a 56.3% potential upside from its $29.44 last closing price.
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RUN shares were trading at $48.07 per share on Thursday afternoon, up $1.07 (+2.28%). Year-to-date, RUN has declined -30.71%, versus a 22.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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