The best solar stocks to watch over the next decade
Updated
There’s a lot more interest in investing now than ever before, though the landscape is perhaps more challenging and risky to navigate through than ever before.
The S&P 500 is breaking all-time highs on a regular basis, retail investor groups are using forums like Wall Street Bets to pool together information and take down big hedge funds, and there’s a steady drip of warnings from investing gurus like Carl Icahn and Jeremy Grantham, who contend the market is way overinflated and due for a healthy correction.
Yes, the stock market is bananas right now, and I wouldn’t be surprised if the dudes in suits accidentally burn the whole thing down again. What’s more, according to a January E-trade survey, over half of respondents with a portfolio in excess of $1 million think the stock market is “fully” or “in somewhat of” a bubble.
Regardless, since SolarReviews is about as compelling a resource about anything solar energy-related on the internet, we’re presenting you with some of the most interesting publicly traded renewable energy and related clean energy storage companies, just so you’re aware of them.
That said, please bear in mind none of the following is investment advice. Keep in mind, we are not a financial advisory firm. Your best bet is always to contact an expert to answer any questions you have before proceeding with an investment with any of the following companies.
Do note though, we are really good at providing you accurate solar installation estimates based on your location and power bill. Our calculations are based on the most up-to-date information available, and allow you to actually see how many panels will fit on your roof and how much you’ll be able to save after you account for local installation incentives and the 26% solar federal tax credit.
Now, let’s dive into the list of companies by market capitalization:
SMA Power Technology (OTCMKTS: SMTGY)
SMA is the largest manufacturer of string solar inverters. Inverters are responsible for converting DC electricity from solar panels into electricity your home appliances and anything else plugged into a wall outlet can use. That makes inverters an integral part of any basic solar installation.
SMA’s popular Sunny Boy inverter. Image source: SMA Solar
The company has a range of inverter sizes across the spectrum of solar system sizes. Its most popular inverter for most residential installs is the Sunny Boy model, pictured above. Over the years, SMA has been acclaimed as one of the most reliable standbys for inverter performance and value.
SolarEdge Technologies (NASDAQ: SEDG)
SolarEdge’s core product is called a power optimizer. Power optimizers are a type of module level power electronics (MLPE) and are installed on the back of every solar panel to help smooth and condition the DC electricity they produce.
They also allow you to see how much electricity each individual solar panel generates and makes the entire array more efficient by reducing the interdependence of each panel in a wired set.
For example, if a pile of leaves were covering some of the panels, the rest of the panels would still be able to feed 100% of their generating capacity along to a central inverter - and your home.
Moreover, SolarEdge sells its own line of inverters to pair with their power optimizers. SolarEdge has a huge share of the power optimizer and home solar inverter market currently, and its strong cash position on its balance sheet, first-mover tech advantage, and manufacturing economy of scale sets it up to continue to perform well over the longer term growth of the industry.
Enphase Energy (NASDAQ: ENPH)
Microinverters allow for similar levels of solar panel output efficiency across conditions as power optimizers, though have more circuitry affixed to every single panel. Enphase has been a pioneer in panel-level DC to AC conversion technology and system monitoring for well over a decade.
While aforementioned power optimizers are relatively inexpensive compared to solar microinverters built by Enphase Energy, there are some tradeoffs which bode well for the growth of both of these companies.
Among these, microinverters allow system owners to more easily expand the size of their solar arrays and offer a more granular view of solar module performance. According to PV magazine, SolarEdge and Enphase now account for nearly 80% of the inverter market in the United States.
SunPower (NASDAQ: SPWR)
SunPower prides itself on solar panel quality and customer experience. Its panels have always ranked in the top of the class for their ability to maintain electricity output in less than ideal temperatures (as measured by temperature coefficient), and efficiency (the amount of electricity generated per solar cell).
Its dealer network is robust and well-organized across the top areas in the United States to install solar panels.
Though SunPower has garnered nearly 1,000 solar patents over the years, it is transitioning away from module production to more of a focus on battery storage and energy management software. That may turn out to be a wise move, as there is now an enhanced consumer awareness and desire for energy resilience.
SunPower’s revenue in 2020 surpassed $1 billion.
Daqo New Energy (NYSE: DQ)
Perhaps it’s a sign of the times when a company can have a market capitalization of over $7 billion dollars and its website still uses Adobe flash and major portions of its display appear broken. That’s what we get at first glance with Chinese silicon semiconductor manufacturing behemoth Daqo New Energy.
Above, polysilicon, before being formed into wafers for the solar industry. Image source: Silrec Corporation
Despite their lack of web savviness, they are able to ship out 70,000 tons of polysilicon wafers annually, the core material for photovoltaic cell production. They are a global leader in polysilicon manufacturing, and all those wafers are delivered to solar cell manufacturers across the planet for use in their modules.
While it is laudable, Daqo made a recent public statement reiterating their position against “forced” or “prison labor”, it raises eyebrows that such a position needed to be publicized in the first place.
Sunnova (NYSE: NOVA)
Since we’ve been covering the residential solar industry, we’ve seen plenty of innovative ideas to help make it easier for people to go solar. We’ve covered zero-money-down power purchase agreements, solar panels you can lease, and low-income solar initiatives.
While these kinds of programs can help those with limited means participate in a clean energy future, what if your roof needs to be replaced before you can get solar installed? For many, that’s an expensive proposition, and it puts the dream of going solar out of reach.
Image source: Sunnova
Sunnova, a Houston-based solar company, tackles this problem by offering bundled financing options for new roofing work, solar panel and battery backup system installations, and system monitoring services.
They are the first residential solar-plus-battery storage provider to go public with an IPO since 2015. Sunnova is forecasting 40% growth in its customer base in 2021-2022
SunRun (NASDAQ: RUN)
Since 2007, SunRun has been a force as a consumer-focused solar energy marketer and installer. More recently, the company has acquired Vivint solar, who was one of the largest solar sales companies in the United States.
Both companies gained a lot of market share by offering zero-money-down solar installations, and SunRun still focuses its efforts on aggressive marketing tactics. While consumer reviews of SunRun are not all flowers and rainbows, the company is a giant and knows how to close deals.
Like Sunnova, SunRun has also shifted their focus toward home battery storage - and have actually gone a step further. SunRun has inked some impressive deals with utility companies who will agree to bulk-purchase aggregated consumer battery capacity when market conditions are most agreeable.
Analysts are expecting sales in 2021 to be well over $1 billion.
Tesla (NASDAQ: TSLA)
It’s difficult not to mention Tesla in this post.
Yes, Elon Musk has set his sights on helping humanity colonize the moon and Mars. After all, we’ll probably need somewhere else to live when this planet becomes too hot and crowded. In the meantime, we’ll need more time to develop the capability to make that sort of interplanetary pursuit a reality.
Image credit: Livescience.com
Good on him for being able to use his smarts and initiative to build an electric car company in addition to SpaceX, and to persevere when it almost went bankrupt. He also gets kudos for convincing the Tesla board to swoop in to purchase struggling SolarCity, who was the largest residential solar installer in the United States at the time.
Since then, the company has launched its wildly popular Powerwall 2 home battery storage system and the company is now well set up to be at the forefront of a movement to revise how homeowners use energy and get around the roads.
The Tesla brand is compelling and inspirational, oozing the feeling of being invited to taste the future with every interaction. From its simple marketing, to its sleek electric vehicles and solar roof hardware, perhaps it isn’t a surprise the stock itself is trading at an exponential multiple of any historical regard to “valuation”.
There simply isn’t another company or person out there as exciting for masses of people to follow, perhaps since the heydays of Steve Jobs at Apple. Of note, Tesla alum Arch Rao is now leading the team at Span.io, a similarly sleek brand aimed to usher all of our home fuse boxes into a digital and cleaner energy future.
CMS Energy (NYSE: CMS)
While not purely a solar energy company, CMS is worthy of attention here because they are well set up to profit from multiple angles of how electricity is created, distributed, and paid for.
CMS runs electric utility companies and operates more than 1.1 gigawatts of generation facilities nationwide (including large solar farms). Its subsidiary, Enerbank, is currently the largest provider of home solar loans in the country.
What’s more, CMS offers a 3% stock dividend, presenting a compelling yield on a well-diversified organization. Regardless, we’d love to see them transition faster from their investments in the oil and gas industry into a cleaner energy sector company. But at least they’re making some strategic moves towards getting there.
AES Corporation (NYSE: AES)
AES has over 400 megawatts (MW) of commercial solar-plus-storage projects either completed or in construction in the United States.
They have strong partnerships with Siemens, the German industrial conglomerate, and have landmark projects under their belt like a 100MW project in California which was part of a $2 billion energy-envisioning program for the state.
Invinity Energy Systems (OTCMKTS: IVVGF)
Invinity is now the leading provider of Vanadium redox flow batteries for commercial applications in the world.
Flow battery technology allows for a theoretically limitless supply of charge and discharge cycles, which present compelling long-term return on investment opportunities for operators of microgrids or light industrial facilities. The battery arrays are typically set up alongside massive solar energy fields for onsite usage and distribution.
Note, Invinity Energy shares are quoted on the AIM market of the London Stock Exchange.
Bloom Energy (NYSE: BE)
Bloom is an industrial provider of large-scale battery storage equipment. As the electric grid has faced increasing strains of late, Bloom’s systems help protect customers from outages that could cost homeowners a lot of money.
Image source: Data Center Knowledge
Their massive fuel cell battery arrays can be charged up from solar arrays and the grid, and can be used to top off EVs which may be onsite in an overhead solar carport.
Analysts expect their sales to rebound to near $1 billion by the end of 2021.
Switch (NYSE: SWCH)
Switch also is not a purely solar energy company. However, they operate massive, futuristic data centers, and solar energy is a core part of their operations. They believe “humanity relies on the intelligent and sustainable growth of the internet”.
Image source: Switch
Switch has invested in 179 MW at two locations in Nevada to power all of its data centers in the state. It also serves as a model for others in the data center industry when it comes to weaving progressive energy into its blueprints for revenue growth.
Can’t decide which solar stock to invest in? Consider a solar ETF
As in other areas of the market, the best thing for most retail investors and retirement account holders might be an exchange-traded fund (ETF) designed to track a broad swath of the market.
Failures of individual companies can and do happen, but ETFs are designed to represent the promises of future returns from a single segment of the market.
In the case of solar, that ETF comes from Invesco, and it’s called TAN, which has holdings that include stocks from many of the companies featured in this article, including Daqo, Enphase, SolarEdge, and Sunnova, and others we don’t cover here like First Solar (NASDAQ: FSLR) and Canadian Solar (NASDAQ: CSIQ).
If you’re an incredible stock picker, you might find a company or two that outperforms all others, but if you believe the solar industry as a whole will continue to grow and thrive, TAN might be a good choice for you.
Between January 2020 and January 2021, TAN grew in value by more than 220%. The industry weathered the COVID pandemic and looks poised to benefit greatly from the Biden Administration.
And if you believe market-disruption experts like Tony Seba, the solar industry is about to become an unstoppable juggernaut of parabolic growth as solar becomes the cheapest form of electricity generation in the history of the world. Imagine what that growth might do to the value of the many well-established companies whose stock makes up TAN’s holdings.
Final thoughts on solar stocks to watch
There is a wide variety of interdependent people and businesses that add value to the solar industry. For example, without well-organized solar installation crews, solar panels and the manufacturers who make them wouldn’t be worth all that much. There are also organizations dedicated to the purpose of maintaining and running solar energy farms, aside from those who want to install panels on your roof.
Demand in the marketplace truly drives the value of solar power companies, and that shows no signs of ebbing soon. Between people and institutions driven by the promise of lower emissions to slow climate change and canny investors who understand the financial benefits of renewable energy sources, solar will be in huge demand in the coming years, with no end in sight.
As a collective, the major contributors to the solar energy movement will be largely responsible for our overdue transition away from polluting fossil fuels and towards a cleaner energy future for us all.
We’re still in the early days of the movement, but we’re hopeful this collection of publicly traded solar energy stocks has inspired you to do some more research on your own and find your own favorite green energy stock picks.
Key takeaways
- Stocks in companies that are powering the energy revolution have become extremely valuable in recent years, and many of these companies should be well-positioned for future growth.
- Be sure to pay attention to companies that supply the raw and pre-assembly materials used by wide swaths of the industry, because these companies will benefit from a robust worldwide solar marketplace no matter which manufacturers and retailers succeed.
- If you’re not ready to pick stocks from individual companies, it might be wise to choose the TAN solar ETF, which includes holdings of many of the important companies in the industry, and whose value grew over 220% in 2020.
Dan Hahn
Solar Journalist
Dan is a solar journalist and content advisor with SolarReviews. He also works with solar installers and solar nonprofits to develop and execute strategic plans.