The Solar Industry Overview - What potential does it have?
As we have already discussed, the cost to install solar has dropped dramatically by 70% from 2010 to 2020 which made it possible to deploy a lot of new solar systems all over the world. The average-sized residential solar system has dropped from the old price of 40 000 USD in 2010 to about 17 000 dollars in 2020. So the price of residential solar installation has been cut in half which has led to more widespread adoption of solar energy.
It is important to note that in 2019, 40% of all new electric capacity came from the solar sector which is the largest share in history. This fact indicates that the solar sector has been increasing in competitiveness year over year and has seen a huge increase in just a decade. At the beginning of the 2010s, this field was just 0.1% of all US electrical fields to 3% of US electrical generation. This is the main reason why solar panel manufacturer stocks became extremely important as well as popular in the year 2020.
So if we look forward to the future, we can see that solar is expected to be the largest facet of the renewable energy sector with wind coming in second place. If we look at the statistics, we will see that solar is around 15% of renewable energy in 2020 and by 2050 it is expected to be 46% which means that it will triple in terms of the overall usage.
The solar industry as a whole is expected to go from 19% of electricity generation to up to 38% of electricity generation which is double the number. This talks about the utmost importance of the solar sector in general.
It does not mean that the world population will move to completely renewable energy in the early 21st century. This is going to be a slow transition. And because the market is very forward-oriented, it would be a good idea to start investing in solar panel energy stocks right now.
The five best solar energy companies on the stock market
Several important factors prove that investing in this sector is indeed a good type of investment. First of all, almost all statistics show that the expected growth in solar energy is going to be huge. Besides, In 2015, the overall industry price dropped from 10 to 20% which indicated that buying opportunities for solar energy stocks have increased significantly. So almost all professional investors suggest investing in solar power stocks to gain substantial payouts in the future. The most important stocks to mention are Sunrun, Enphase Energy, First Solar, Sun Power, and Canadian Solar. We will discuss each of them in the following paragraphs.
Sunrun (NASDAQ: RUN)
Sunrun is an American company that provides solar panels and batteries. Its headquarters are located in California. Sunrun is one of the hottest solar stocks in the recent decade. In 2020 alone, its stock prices skyrocketed by more than 330%. This proves that Sunrun is one of the most popular and widely used solar energy product providers.
The stock price of Sunrun is 50 US dollars and their market capitalization is more than 10 billion dollars as of April 2021.
Besides, If we look back and take a glimpse at the history of this solar panel company stocks, we will see that the revenues have been going up with the steep uptrend. It means that there has been a lot of growth in the company over the past 10 years. However, the earnings per share have not been very great. In 2019 and 2020, it has been in the red. The earning per share has increased by 43% on average. In the last 12 months, about 28 million shares have been sold by the insiders of the company.
This company is doing a great job at growing their business so there is a big chance that they will have a positive cash flow in the next few years. They have been operating in the industry for more than 14 years so they are experienced enough to know how to be leading in the solar sector. So while the stock prices are still not at the highest points, it is recommended to invest in the Sunrun solar energy stocks to gain a substantial income.
Enphase Energy (NASDAQ: ENPH)
Enphase Energy is the provider of energy management solutions. The company’s market capitalization is 26.7 billion dollars which is probably 10 billion over its direct competitor of solar technology. The revenues have been steadily increasing over the years with the big jump from 2018 to 2019 with 316 million in revenue to 624 million in 2019. Earnings are forecasted to grow about 34% per year. The earnings of Enphase Energy grew about 282% in 2020.
On the other hand, the company’s projected revenues and earnings in 2024 are significantly increasing to about 2.6 billion dollars in revenue and 525 million in earnings. Those statistics are probably one of the most important factors to consider when deciding whether solar power stocks are worth investing in or not.
Enphase energy is a good investment opportunity considering its steady growth rates, high level of margins, and a wide diversity of products. On top of that, Growth is highly likely to continue in the future, because there is a big urgency to beat climate change and to build a more green environment. The company’s total revenues are also going to rise by more than 70% in 2021 and by almost 35% in 2022. All those things indicate that buying Enphase Energy stocks right now is a good investment that will generate big profits in the long-term period.
First Solar (NASDAQ: FSLR)
First Solar is one of the leaders in solar paneling across the whole US. The performance of the company has been extremely good in 2020 in terms of revenues and is predicted to continue growing in the next decades.
The First Solar solar panel manufacturer stocks have been up about 69% and that's roughly around 3.5 billion dollars and they have about 1.6 billion dollars cash on hand which is the greatest number for the company. The latter number indicated that First Solar has a big amount of money to pay for its debts and the net income is much greater than their debts which means they will continue increasing the overall revenue in the future.
Besides, another important thing to note is that First Solar stock has outperformed all the major indexes including the dow jones, the NASDAQ, and the sp 500. Moreover, when the stock fell in March 2020 it managed to hit the highest points already after a couple of weeks. This is why most of the inventors believe that this great performance is going to continue even in 2021. So while we talk about the best solar energy companies on the stock market, First Solar is arguably one of the best that indeed is worth investing in.
Sun Power (NASDAQ: SPWR)
Sun Power is an American company that is specialized in solar power generation. The overall market capitalization of the company is about 6 billion dollars. The share price of the stock is 35$ while the highest number that the share price reached was 82 USD.
On the other hand, the company has a very healthy profit margin at the level of 42%. Besides, in terms of the equity, the equity has gone from negative numbers in 2018 and pulled back in 2019 into the positive and it is looking great in 2020 even though the assets have gone down slightly.
On top of that, the total revenue of the company has gone from 1.8 in 2017 to 1.7 in 2018 and then had a big drop to 1.1 in 2020. However, the overall gross profit has been increasing which is an excellent sign in terms of the potential growth of the company.
Moreover, the gross profit, operating income, and net income were all up from 2017 to 2020. These statistical numbers indicate that they are improving their capacity as well as their storage. This is why a lot of investors believe that Sun Power is one of the best on the solar stocks list and it needs to be watched because it has excellent growth potential in the future.
Canadian Solar (NASDAQ: CSIQ)
Canadian Solar is also part of the solar energy industry; however, it is not the largest company in this field. The overall revenue of Canadian Solar had its ups and downs; however, the tendency is upgrowing. Besides, the company has had a positive net income since 2012. Canadian Solar earnings and revenues have surpassed the estimates.
The increase in the total revenue has been 14% and the gross margin has been 13.6%. The company has experienced a 9% annual growth in net income to 3.5 billion dollars.
The future outlook of the company is quite promising as it has high growth potential in the future at a cheap price.
The expected growth of the company is about 4% in the early 2020s. Canadian Solar stocks are considered to be cheap solar stocks that have great potential. This is why it is exceptionally important to invest in this stock to gain big payouts in the long-term.