How to invest intelligently in solar stocks

The solar industry is growing: more people are adding solar panels to their homes and, at the same time, are looking to make money by investing in businesses across the solar industry. For investors, the solar industry represents a unique opportunity, encompassing companies across many sectors including manufacturing, utilities, installation, and technology. With so many companies in this highly profitable emerging space, you may wonder as an investor: what are the most important things to look for when choosing what solar stocks to buy, and how can you know what companies are safe to invest in? As with any stock-buying, there are many important factors to consider.

Disclaimer: This article is intended to provide an informational overview of different options available for investing in solar companies. It is not intended to serve as official investment guidance. Readers interested in investing in solar-based companies should use their best judgment and seek advice from a licensed professional before making any purchase or investment.

The increased focus of many governments, states, and companies on renewable energy, specifically solar, is favorable for the solar industry. Solar capacity from new installations expanded in 2021, signaling a steady rise in customer demand preceded by years of growth. On the policy front, new proposed legislation, such as the Build Back Better Act, includes expanding tax credits for domestic solar manufacturers. These factors, along with a greater desire for renewable energy spurred by rising prices for fossil fuels (including natural gas) mean that companies in the solar industry are a great choice for investors.

While larger utility companies with solar divisions alongside other energy sources traditionally perform well, several companies focus only on solar that are worth investing in this year.

First Solar

NASDAQ: FSLR
Price as of April 6, 2022: $82.84

First Solar is one of the largest American solar companies, reporting $907.32 million in revenue as of December 2021 (a 48.93 percent increase year-over-year). Based in Tempe, Arizona, First Solar is unique in that they both manufacture and install solar panels. They are also a valuable choice for investors because they only work on utility-scale projects. So, unlike most companies primarily involved in smaller-scale residential and commercial projects, First Solar products are only used in large projects.

First Solar manufactures thin-film cells using a proprietary combination of cadmium-telluride instead of the traditional crystalline silicon. In 2018, this allowed them to avoid many of the negative effects of that year’s solar tariffs. They saw an increase in sales of $0.3 billion at the end of Q4 2021.

Why invest in First Solar?

First Solar stands alone on this list as a domestic producer of solar panels. They’re also unique in their use of thin-film solar technology. First Solar is a great bet if you want to invest in an American solar manufacturer or a different type of solar panel technology.

SolarEdge Technologies

NASDAQ: SEDG
Price as of April 6, 2022: $336.40

SolarEdge is another leader in the manufacturing sector of the solar industry. They’re one of the largest producers worldwide of inverters and power optimizers that work to convert the solar energy generated by solar panels into electricity. SolarEdge manufactures string inverters, which aggregate the power output of groups of solar panels in your system into “strings.” Multiple strings of panels then connect to a single inverter where electricity is converted from direct current (DC) – aka what your solar panels produce – to alternating current (AC) – aka what your appliances use – electricity.

String inverters are considered the least expensive type of solar inverter. For investors, their lower cost sets SolarEdge products apart from others. They’re also very flexible in terms of the variety of products they offer, including their own solar battery and other technologies. Spurred by their residential market growth, SolarEdge’s revenue increased from $1.4 billion in 2020 to $1.9 billion in 2021, according to their earnings report.

Why invest in SolarEdge?

SolarEdge is unique in their wide variety of offerings and great prices. These new offerings include emerging technologies such as electric vehicle (EV) charging and storage, making them a strong offering for the future. If you want to look for a manufacturer with a wide range of products, SolarEdge may be right for you.

Enphase Energy Inc.

NASDAQ: ENPH
Price as of April 6, 2022: $212.95

Based in California, Enphase is a manufacturer of solar inverters as well as batteries and a variety of other panel-level technologies. Their microinverter technology works by having small inverters located at each panel in your solar system. For investors, this is important because microinverters are especially popular in the rapidly growing residential market since they allow users to monitor the performance of each panel.

While offering slightly more expensive products than other manufacturers, Enphase has seen success because of its variety of offerings, including their all-in-one energy system. By the end of 2021, they reported record revenues of $412.7 million.

Why invest in Enphase?

Enphase is also based in the U.S. and is a good choice for investors because of its leading inverter technology. Because they use microinverters in each panel, when one panel fails, the system keeps running. Enphase could be a great stock to add to your portfolio if you want to invest in an American inverter manufacturer.

SunPower

NASDAQ: SPWR
Price as of April 6, 2022: $20.94

SunPower is another top solar manufacturer based in the U.S. with facilities across several continents. In 2019, they announced the start of a new manufacturing arm of their company called Maxeon which is focused on installation. They are primarily known for manufacturing solar panels but also offer fully integrated generation and storage systems. SunPower's industry-leading solar panel efficiency, which ranges from 20.1% to 22.8% sets them apart. They also have a superior 25-year warranty.

Why invest in SunPower?

To put it simply, SunPower makes great solar panels. Theirs are among the most efficient on the market, rivaled mainly by LG’s offerings. In 2022, LG announced that they would no longer be manufacturing panels, leaving SunPower as one of the industry leaders in efficiency. SunPower’s all-in-one process, from quoting through to installation and storage, makes them a good choice for investors.

JinkoSolar

NASDAQ: JKS
Price as of April 6, 2022: $43.73

JinkoSolar is perhaps the largest manufacturer of solar panels in the world. Based in China, they have a facility in Malaysia as well as a newly built manufacturing center in Jacksonville, Florida. Their best-selling line in the U.S. is their Eagle series, which is manufactured domestically. JinkoSolar offers industry-leading prices for their panels, making them an extremely attractive purchasing option for homeowners.

Why invest in JinkoSolar?

In the past few years, JinkoSolar has grown exponentially as a company. They’ve expanded into new markets and performed extremely well in the worldwide panels market. If you’re looking to invest in a large and quickly growing company, JinkoSolar could be the right choice for you.

Events in 2022 have had massive effects on the solar industry and investments. Gas prices worldwide have increased partially as a result of Russia being hit with a variety of sanctions after their invasion of Ukraine. Overall, more countries across the world have sought to lessen their reliance on fossil fuels and turn to solar and renewable energy companies for solutions. Despite uncertainties, investors should look to companies with diverse product offerings and technologies that set them apart.

Using the EnergySage Marketplace to find installers near you is a great way to save money and invest in your future since your own solar system provides a great return on investment. When you sign up, you’ll receive up to seven quotes from installers in your area and be able to choose what fits your home and your budget.