During the past 10 years, solar has experienced an average annual growth rate of 42%. The reasons? You can point to federal policies like the Solar Investment Tax Credit, cheaper rates for solar panels and, simply, increasing demand. According to the Solar Energy Industries Association, the United States has more than 100 gigawatts (GW) of solar capacity installed, enough to power 18.9 million homes.
The state of California mandated that new single-family homes and multi-family dwellings up to three stories high must include solar panels starting in 2020. A second mandate also requires commercial buildings to have solar panels and battery storage.
Why not take advantage of the here-to-stay trend involving clean energy? Let's find out how you can invest in stocks.
What is Solar Energy and Why Invest in It?
What is solar energy, anyway, and why would you want to invest in it? Solar energy uses the sun's light and heat to generate renewable power. Solar panels offer the most common form of solar energy, which means they absorb photons, or particles of light, with photovoltaic (PV) cells. Solar panels generate direct current (DC) energy and then convert it to usable alternating current (AC) energy, which then flows through the home's electrical panel.
The future of energy investment incorporates clean and green energy and incorporates wind, water and solar energy. This rapidly advancing industry can be a big moneymaker for you.
How Can You Invest in the Solar Industry?
You can invest in more than just solar panels — there are opportunities all along the solar energy supply chain. You might consider investing in raw material production, wafer manufacturing, solar cell modules and panels or the companies that install them, for instance.
You might also think outside the supply chain and instead, invest in certain companies that use solar extensively. Here are some companies that use solar/renewable energy extensively, according to the Climate Reality Project.
- Intel Corporation NASDAQ: INTC: Intel carved itself a niche on the Environmental Protection Agency’s (EPA) Green Power Partnership National Top 100 list as a green power partner. The company purchases billions of kilowatt hours of renewable power, generated from wind, solar, geothermal and more. It has a wind micro-turbine array on its roof and has facilitated on-site solar plants at several of its facilities.
- Kohl's Corporation NYSE: KSS: The EPA puts Kohl’s Department Stores lists Kohl's on its annual Green Power Partnership Top 30 Retail ranking. Many stores are Energy Star-certified and have on-site solar panels and carbon-neutral operations.
- Walmart Inc. NYSE: WMT: Walmart has been an EPA Green Power Partner of the since 2009 and obtains a large amount of electricity from green power.
- Apple Inc. NASDAQ: AAPL: Apple definitely keeps on top of its carbon footprint with corporate solar installations and a goal of becoming 100% carbon neutral by 2030.
So many other companies invest in solar power. If it's important to you, do your research prior to investing so you know whether the companies you invest in leave a smaller footprint.
Best Solar Stocks to Invest in This Year
Let's take a look at a few stocks to consider investing in.
Brookfield Renewable Partners LP owns a portfolio of renewable power generating facilities in North America, Colombia, Brazil, Europe, India and China through hydroelectric, wind, solar, energy transition (generation, pumped storage, cogeneration and biomass distribution) and corporate.
Renewable reported funds from operations (FFO) of $210 million or $0.33 per unit for the three months ended September 30, 2021, a 32% increase from the prior year. The company's assets continue to perform well with high levels of asset availability and new acquisitions.
The company had approximately 1,300 gigawatt hours (GWh) of renewable generation, 8,000 megawatts of development projects through construction and advanced stage permitting and approximately $2.4 billion ($600 million net to Brookfield Renewable) of equity across a range of transactions year-to-date.
ReneSola Ltd. manufactures solar wafers and modules and has several segments, including wafer (manufacture and sales of monocrystalline and multicrystalline solar wafer and processing services), cell and module (creation and sales of PV cells and modules) and solar power projects (development and electricity).
Gross profit was $6.1 million in the third quarter of 2021, yielding a gross margin of 39.2%. Gross profit and margin compare to a gross profit of $11.3 million and gross margin of 61% in the second quarter of 2021.
Net income attributed to ReneSola Power common shareholders was $0.7 million. Cash flow used in operating activities was $5.1 million. Cash and equivalents were $275.8 million, compared to $286.0 million at the end of Q2 2021 and total current assets were $351.2 million, compared to $357.1 million in Q2.
First Solar Inc. designs, manufactures, markets and distributes PV solar power systems (including development, construction, operation and maintenance of photovoltaic solar power systems) and solar modules (including the design, manufacture and sale of cadmium telluride solar modules, which convert sunlight into electricity).
Net sales for the third quarter were $584 million, a decrease of $46 million from the prior quarter, mainly due to lower systems segment revenue. Operating income for the third quarter was $51 million. Net income per diluted share for the third quarter was $0.42, compared to $0.77 in the prior quarter.
Cash, cash equivalents, restricted cash, and marketable securities at the end of the third quarter totaled $1.9 billion, a decrease of $111 million due to capital expenditures and reinvestment of restricted cash.
It's one of the most profitable companies in solar and is now back in growth mode, so long-term investors may want to consider it.
Consider Solar Long-Term
Ready to invest in solar? Consider investing in certain solar companies for long-term success. Solar isn't going anywhere, and as solar becomes more sophisticated, you're only going to see more innovation as time goes on.
Before you consider First Solar, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and First Solar wasn't on the list.
While First Solar currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.
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