The solar energy industry has grown rapidly, even though fossil fuels remain the dominant source of global energy consumption. Companies in the solar industry come from multiple sectors, including utilities, industrials, and energy, and include popular stocks such as SolarEdge Technologies (SEDG) and SunRun Inc. (RUN). While some major utilities and energy companies have solar and renewable energy divisions, these companies are typically not included in the industry listings because the parent company’s primary focus is not solar.
Solar stocks, represented by the Invesco Solar ETF (TAN), have outperformed the broader market over the past year. TAN has delivered a total return of 52.3% over the past 12 months, ahead of the iShares Russell 1000 ETFs (IWB) total return of 34.3%. These market performance figures and all statistics in the tables below are as of September 14, 2021.
Here are the top three solar stocks with the best value, fastest growth and most momentum.
These are the solar stocks with the lowest 12-month price-earnings ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you are paying less for every dollar of profit generated.
|Best Value Solar Stocks|
|Price ($)||Market Capitalization ($B)||12 month ongoing P/E ratio|
|ReneSola Ltd. (SOL)||7.16||0.5||6.1|
|SunPower Corp. (SPWR)||22.21||3.8||9.1|
|Daqo New Energy Corp. (DQ)||62.22||4.6||11.7|
- ReneSola Ltd.: ReneSola is an international renewable energy company that builds and manages energy projects. The company focuses primarily on the development, construction management and financing of solar power projects. ReneSola recently announced financial results for the second quarter of fiscal year 2021 (FY) ended June 30, 2021. Net income attributable to shareholders increased 125.2% year-over-year, despite a 29.9% decrease in net sales. 2% compared to the same quarter last year. The company’s cost of revenue fell 61.4%, boosting net income.
- SunPower Corp.: SunPower is an integrated solar products, systems and services company that sells primarily to residential and commercial customers worldwide. The company designs and produces solar panels and systems. SunPower announced financial results in early August for the second quarter of 2021, ending July 4, 2021. Net profit grew 34.5% year over year on sales growth of 41.9%. The company said it saw increasing consumer demand for solar power.
- Daqo New Energy Corp.: Daqo New Energy is a China-based solar energy company that produces polysilicon for sale to solar cell and module manufacturers.
These are the top solar stocks, ranked by a growth model that rates 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 growth ( EPS). Both sales and profits are critical factors for a company’s success. Therefore, ranking companies by only one growth metric makes a ranking susceptible to that quarter’s accounting anomalies (such as changes in tax laws or restructuring costs) that may prevent one figure or the other from being representative of the company in general. Companies with quarterly earnings per share or revenue growth of more than 2500% were excluded as outliers.
|Fastest Growing Solar Stocks|
|Price ($)||Market Capitalization ($B)||EPS growth (%)||Revenue growth (%)|
|Daqo New Energy Corp. (DQ)||62.22||4.6||N/A (see company description)||230.6|
|Enphase Energy Inc. (ENPH)||160.09||21.6||N/A (see company description)||151.8|
|Sunrun Inc. (RUN)||45.95||9.5||N/A (see company description)||121.3|
- Daqo New Energy Corp.: See above for company description. The growth rate of the company’s earnings per share is not included in the table above because the growth rate, at an astronomical rate of 9,980%, exceeds Investopedia’s usual 2,500% mark. Any growth rate above this amount is considered an outlier and is likely due to one-off accounting adjustments or other issues that may not accurately reflect the performance of a company’s primary operations. However, Daqo still ranks as the best growth stock, even excluding its earnings per share growth rate.
- Enphase Energy Inc.: Enphase Energy is a global energy technology company providing microinverter-based solar-plus-storage systems. It brings together solar energy generation, storage and energy management on one platform. The company announced financial results for the second quarter of 2021, ending June 30, 2021 at the end of July. Enphase Energy posted a net profit of $39.4 million, a significant improvement from the $47.3 million net loss recorded in the same year. quarter of last year was reported. Net sales increased by 151.8% year-on-year. The company said demand for its microinverter systems has outstripped supply due to supply chain constraints on components. Because the company’s EPS went from negative in the year-ago quarter to positive in the most recent quarter, the above table could not calculate an EPS growth rate.
- Sunrun Inc.: Sunrun is a company for solar panels and batteries for home use. It designs, develops, installs and maintains residential solar energy systems in the US. Sunrun announced in early August that co-founder Lynn Jurich will transition from her current role as chief executive officer (CEO) to executive co-chair of the company’s board of directors. Mary Powell, a Sunrun executive and former president and CEO of Green Mountain Power, was appointed CEO effective August 31, 2021. Sunrun reported negative EPS for the most recent quarter, so no EPS growth rate was calculated for the above table.
These are the solar stocks with the highest total return over the past 12 months.
|Solar stocks with the most momentum|
|Price ($)||Market Capitalization ($B)||12 months sequential total return (%)|
|GCL Poly Energy Holdings Ltd. (GCPEF)||0.17||4.3||377.9|
|ReneSola Ltd. (SOL)||7.16||0.5||364.9|
|Daqo New Energy Corp. (DQ)||62.22||4.6||176.4|
|iShares Russell 1000 ETF (IWB)||N/A||N/A||34.3|
|Invesco Solar ETF (TAN)||N/A||N/A||52.3|
- 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 provides solutions for solar systems. The company also owns several large-scale solar parks worldwide.
- ReneSola Ltd.: See above for company description.
- Daqo New Energy Corp.: See above for company description.
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