Why These 3 Stocks Are the Best Ways to Play Solar Right Now

Stocks to buy

There was never a better time than now to invest in solar energy. As the world gears up to increase the use and adoption of renewable energy sources, companies in the sector are set to gain. Per the International Energy Agency, the world’s annual pace of solar panel installations will quadruple by 2030.

The Inflation Reduction Act offers tax credits to companies involved in solar power system installations, and the Defense Production Act has also encouraged more production of solar panels. Countries across the world are taking similar measures and promoting the use of solar energy.

Considering the growing demand for solar panels and inverters worldwide, solar companies are set to benefit. We will see top and bottom-line growth in companies engaged in this industry, so now is the right time to consider investing in solar stocks. If you want to make the most of the solar boom, now is the time to consider these three solar stocks to buy.

Solar Stocks to Buy: First Solar (FSLR)

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I’ve already said this in the past and I’ll say it again: If you’re buying only one solar stock, it has to be First Solar (NASDAQ:FSLR). The company is a leader in photovoltaic solar energy solutions, and it designs, makes, and sells cadmium telluride solar modules that can convert sunlight into electricity. The global rise in energy costs has led to strong demands for solar power. For First Solar, this is only the beginning. Governments across the world are trying to encourage renewable energy, which will benefit the company.

FSLR stock is one of the best solar stocks, trading at nearly $197 right now. The company is also up 35% year to date and 197% for the last 12 months. Despite the rally, there is still a potential to soar higher. Guggenheim analyst set a price target of $334 for the stock with a buy rating.

The company bought Evolar, a Swedish tech firm, for $80 billion, and the acquisition is aimed at developing the “next generation” of photovoltaic (PV) technology.

The company has also been holding strong on the financial front and reported sales of $548 million and a net income per share of $0.40. It also saw a decrease in sales due primarily to the drop in modules sold to third parties. However, it maintained the guidelines for 2023, anticipating net sales ranging between $3.4 billion to $3.6 billion and an EPS per diluted share of $7.00 to $8.00.

First Solar recently received a $1 billion revolving credit facility for five years, receiving support from several banks. The company has shown resilience in market downturns and has performed better than its competitors. This is one of the highest-return solar stocks to own.

SolarEdge Technologies (SEDG)

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Solar panel electronic company SolarEdge Technologies (NASDAQ:SEDG) has shown steady performance in the past few years. The company is into chargers, batteries, inverters and optimizers, as well as software that maximizes energy production and helps increase efficiency. This is the best time for a solar company to be in business, and the demand for its products will only grow. The numbers prove that SolarEdge is moving in the right direction and is one of the top solar stocks to own.

The company reported record revenues of $943.9 million in the first quarter, of which $908.5 million was from its solar segment. With the rising adoption of solar, there is a steady increase in demand and sales for optimized inverter solutions. SolarEdge shipped over 3.6 Gigawatt inverters in the recent quarter, bringing the revenue to $943.9 million.

One strong reason to bet on this stock is its global presence. The business has seen a rise in global demand across Germany, South Africa, Australia, France, Switzerland and Austria.

SEDG stock is trading at over $272 today, which isn’t cheap. However, it’s much lower than the 52-week high of $375 and is down 15% in the past six months. Considering its long-term growth potential, it is the best way to invest in solar right now. As solar adoption increases over this decade, SolarEdge is set to gain. SEDG is one of the top solar stocks to buy.

Enphase Energy (ENPH)

A strong player in the industry, Enphase Energy (NASDAQ:ENPH) has steadily grown in the clean energy space. The company has a presence in energy storage, solar microinverters, and EV charging segment. It saw the first quarter sales reach $726 million, with a 25% increase in revenue in Europe. The company also saw net income hit $147 million, more than double the $52 million from the previous year. I strongly believe this momentum will continue in the coming months, and we could see stellar second-quarter results.

Another reason to bet on this company is its presence in the EV industry. That is one sector steadily growing year after year, and the demand for chargers is only going to rise. Enphase Energy provides Level 2 chargers for residential use, and this demand will help increase revenue.

The company recently announced an expansion of its business in Brazil. The country has seen a rise in the demand for residential solar energy systems, which means this move is well-timed. Enphase has also expanded the distribution partnership in Europe through 4blue across Belgium, Germany, Luxembourg, and the Netherlands. It has also collaborated with Credit Fair to provide flexible solar financing in India.

Considering the solar capacity of India, that could be a huge move for the business, as it will be able to reach a wider market and see an increase in revenue.

On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

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