With summertime finally, here, the northern hemisphere is hitting peak time for solar power generation. As nations work to meet their net-zero climate goals, solar power will become a greater and greater share of the total energy market. High returns for solar investments have come to investors willing to gamble on new technology. And now, those returns will continue to soar as top solar companies expand their market share.
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Solar power is continuing to evolve. In just a few decades, it has gone from inefficient to one of the market’s most competitive forms of energy. Not only that, but technology has also brought down the cost of solar panels, the cost of installation, and the cost of maintenance. And that means a greater return for solar companies as the cost of power remains inflated by the price of fossil fuels. As solar power gains greater market share, the top solar companies could attain the market caps of the top fossil fuel companies today.
There are many different high-return solar investments for a shrewd investor. Some companies provide power directly, some sell solar panels, and some sell the ancillary equipment that makes solar power worthwhile. All these companies will have different strategies, technological trajectories, and growth opportunities. But for an investor looking to ride the bask in the light of clean energy and good returns, here are some of the top solar stocks to buy right now.
Enphase Energy (ENPH)
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Enphase Energy (NASDAQ:ENPH) already proved the doubters wrong when it went up over a thousand percent since 2019. Now it seeks to continue as one of the highest-return solar investments available.
Enphase’s secret ingredient is its micro-inverters which turn DC (direct current) power into AC (alternating current) power. The difficulties of converting DC to AC go back to Thomas Edison and Nikola Tesla. Edison championed DC, while Tesla championed AC. While it may seem AC won the war, as most of our homes are powered by it, DC current still plays a role; most solar panels generate DC power.
Because of this, solar panels need a micro-inverter, or the home needs to buy an inverter, to produce usable power. It’s much more convenient if each panel comes with an Enphase micro-inverter, which is why their market share has risen, and they’ve become a top solar company to invest in. Thus no matter whose solar panels you buy, you’ll probably get an Enphase micro-inverter to go with them.
Financially, Enphase has shown it is capable of rapid growth. Revenue in Q1 2023 was $726 million, up from just $441 million in Q1 2022. Net income also expanded rapidly, reaching $147 million in Q1 2023 versus $52 million in Q1 2022. Enphase has found its niche in the market and is exploiting that niche for all it’s worth.
The bottom line is this: solar panels aren’t useful without inverters, and Enphase is the best solar stock producing them.
First Solar (FSLR)
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First Solar (NASDAQ:FSLR) has become a truly attractive investment in solar energy. It recently acquired Evolar, a manufacturer of thin-film perovskite solar cells. These next-generation photovoltaic panels have the potential to revolutionize the industry. While perovskite solar cells have faced challenges because of long-term stability, First Solar’s expertise and resources may be key to unlocking their true potential.
Perovskite solar cells have the potential to be high-efficiency and ultra-low-cost, but their long-term stability has hindered their commercial viability. Perovskite compounds can also be deposited onto the curved surfacing, making curved solar panels much cheaper to produce. If perovskite solar panels become successful, First Solar could unleash a true solar boom. They would then be poised to capture a significant solar market share.
First Solar is also the largest producer of photovoltaic panels in America. That could be crucial as Congress has repeatedly sought to protect the American solar panel industry. Foreign panels have faced tariffs, and Congress has tried to expand those tariffs by reducing waivers.
Financially, First Solar is in a good spot. Net sales in Q1 2023 were $548 million, up from $367 million in Q1 2022. And gross profit has risen to 20.4%, up from 3.1% in Q1 2022. First Solar has shown its ability to grow and grow profitably as the use of renewables expands. And renewable power will need to grow exponentially for nations to hit their climate goals. That, plus their technology edge, makes First Solar one of the best solar stocks to buy before the boom.
SunPower (SPWR)
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SunPower (NASDAQ:SPWR) may be small, but it is an enticing stock option thanks to its impressive growth trajectory. In Q1 2023, SunPower reported a customer base expansion of 21,000 and a year-on-year growth rate of 27%. Revenue grew by approximately the same amount. As a pure-play power company, they’re showing themselves as a force to be reckoned with.
Notably, SunPower is collaborating with OhmConnect (privately held), particularly in California. Through this partnership, SunPower customers can automatically dispatch excess energy to support the grid during periods of high demand. This system allows SunPower customers to try to take advantage of the efficiencies usually reserved for “real” power plants. Customers can dispatch energy when it’s more expensive and try to use it when it’s cheapest. This innovation is a boon for both customers and shareholders.
Expanding beyond California, SunPower is also making significant strides into the Midwest. By partnering with Wolf River Electric, they ensure they can reach markets in the rest of the United States and give themselves room for growth.
SunPower’s rapid growth and promising position make it a company with immense potential. The continued expansion of its customer base, revenue, and geographic footprint, could give it the ability to outshine its larger competitors. You’ll want to keep a close eye on this company as one of the top solar stocks to buy.
On the date of publication, John Blankenhorn 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.
John Blankenhorn is a neuroscientist at Emory University. He has significant experience in biochemistry, biotechnology and pharmaceutical research.
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