3 Solar Stocks That Will Benefit From the Biden Tariff Holiday

Solar stocks have been on fire lately (pun intended). The sector is getting a boost from the Biden administration which has announced a broad goal for 45% of the nation’s energy supply to come from solar by 2050. That’s up from the 4% the sector supplied in 2020.  

And as one of several steps to reach this goal, the sector got an additional catalyst in June when the Biden administration announced it was suspending tariffs on solar panel components from four countries.  

Think of this like a lock and a key. The lock is the 45% target goal. Suspending the tariffs is one of the keys the administration is using to help break up supply chain bottlenecks.  

However, the tariff news is only accelerating a trend that’s been building for years. Several research firms agree that the solar market is going to grow at a compound annual growth rate (CAGR) of more than 20% over the next five years. And Fortune Business Insights estimates that the global market will be worth $1 trillion at the end of 2028.  

Many companies stand to benefit from this trend. This article highlights three stocks that look to benefit from the rush to solar.  

An Industry Leader With More Growth in Store 

Sunrun (NASDAQ:RUN) has one of the largest installed bases in the United States. The company is known for its home solar and battery storage solutions including solar panels, racks, and solar leads. The San Francisco-based company has over 600,000 customers across 22 states.  

Unlike the other two stocks on this list, Sunrun shares are flat in 2022. That puts FUN stock well below the current analysts’ expectations of $48 per share. But you can’t blame that on revenue. Sunrun is posting strong sequential and year-over-year revenue growth. And with the CAGR projections for the industry, that's not likely to slow down.  

The issue may be more of earnings. Sunrun is still not delivering consistently positive earnings. However, in the most recent quarter, it did post a solid beat of 70% on earnings coming in at negative 6 cents a share as opposed to the negative 20 cents a share that was forecast.  

This Leading U.S. Manufacturer Forecasts Strong Revenue Growth 

First Solar (NASDAQ:FSLR) will be one of the solar companies to benefit the most from the Biden administration’s Inflation Reduction Act. Specifically, the bill provides $40 million in aid to solar manufacturers. First Solar is a U.S.-based company that already has manufacturing infrastructure up and running.  

The company produces solar power systems and modules and is known for its proprietary thin-film module. This allows for better performance in low light and hot weather. Plus, the modules are larger than other modules which helps reduce the cost per watt.  

First Solar plans to increase its manufacturing footprint with the help of the money it receives from this legislation. And the company is showing a strong backlog of orders through 2024.  

However, some investors may wonder if it’s too late to get in on the rally. FSLR stock is already up 49% for the year with all the gains coming after the announcement of the tariff suspensions. That has the stock trading above the consensus price targets of analysts tracked by MarketBeat. But with sales expected to grow by an average of 27% over the next two years, it’s likely that the stock has more upside to come particularly with the knowledge that it does not rely on any silicon from China in its manufacturing operations.  

A Compelling Partnership Adds Juice to This Company 

The last stock on this short list of solar stocks is SunPower Corporation (NASDAQ:SPWR). This is another American company that provides solar, storage, and home energy solutions. And while it does have commercial clients, it’s the company’s appeal to residential consumers that got my attention.  

Specifically, SunPower has a collaboration with IKEA with a goal of making solar power more accessible to consumers. The partnership will start in select California markets this fall.  

SPWR stock is up 26% this year and is above the current price target of analysts tracked by MarketBeat. However, analysts have been raising their price targets after the company posted revenue that was 60% higher from the prior year. The company is also citing a strong backlog of orders for its products that adds credence to future revenue and earnings growth.