In this article, we will be looking at the 12 best solar stocks for 2021. To skip our detailed analysis of the renewable energy sector and its future outlook, you can go directly to the 5 Best Solar Stocks for 2021.
The renewable energy sector and solar energy, in particular, are becoming the new trend in the energy industry, with more people looking to invest in the sector. The Wall Street Journal, citing Refinitiv Lipper data, reported that investors have poured in about $6.2 billion in green-energy ETFs just this year. Additionally, the MAC Global Solar Energy Index was also reported to have generated 233% in returns, inclusive of dividends, for dollar investors during 2020. Not only does this value trump the S&P 500’s 15% figure, but it also left behind the returns from wind-turbine-making companies, as per the Wall Street Journal. As such, stocks like NextEra Energy, Inc. (NYSE: NEE), Brookfield Renewable Partners L.P. (NYSE: BEP), and Enphase Energy, Inc. (NASDAQ: ENPH) are gaining headway in investor circles, and the renewables sector is becoming steadily more lucrative.
This June, the Biden Administration’s ban on the import of solar panel raw materials from Hoshine Silicon Industry Co., Ltd. (SHA: 603260.SS), located in Xinjiang, China over allegations of forced labor in the company has also led to the opening of newer opportunities for solar providers within the US itself. For instance, companies like First Solar, Inc. (NASDAQ: FSLR) are set to benefit from the ban since First Solar, Inc. (NASDAQ: FSLR) itself does not use polysilicon, and as such it may receive an increased number of orders from utility-scale developers, according to Cowen analyst Jeff Osborne.
At the same time, not all solar companies in the country are able to avoid using polysilicon in their products, and so analysts are skeptical of the White House’s claim that the ban would not adversely impact the US solar industry. Major US solar companies that import polysilicon solar panels had begun switching up their supply chains in anticipation of the ban, and Roth Capital Partners LLC mentioned that the ban could be bad news for the American solar industry since Hoshine Silicon Industry Co., Ltd. (SHA: 603260.SS) contributed around 800,000 metric tons of metallurgical silicon per year, and the ban could result in no modules being allowed in the US if they have even a trace of the company’s materials in them, leading to losses for the US in the end.
On the other hand, with the rapid depletion of non-renewable energy sources such as coal, oil, and natural gas, and their ever-worsening effects on the environment, the use of renewable energy sources like solar, wind, and hydroelectric power has become the need of the hour. According to the Natural Resources Defense Council, using fossil fuels most definitely worsens the air pollution and global warming crises due to enhanced levels of carbon dioxide and other greenhouse gases being emitted. Additionally, the mining and unearthing process for underground oil, gas, and coal results in land degradation and mass deforestation, in the case of strip mining for instance.
Research cited by Bloomberg this February explained how fossil fuels pollution causes over 8 million deaths in a year. In spite of air quality improvements recently, particularly in wealthier countries, the research found fossil fuel pollution at a lower level was still harmful. For example, about 350,000 deaths annually were caused by “fine-particulate” pollution in the US. This number has significantly grown in recent years, especially when compared to past estimates of approximately 100,000 to 150,000 premature deaths in a year.
As such, the fact that fossil fuels are only continuing to harm not only the environment but those existing in its sphere has led to the global community gravitating towards renewable energy sources to meet their needs. A recent analysis published by BloombergNEF and mentioned on June 23rd has found that building new and large-scale renewable energy plants to utilize wind or solar power for instance in almost half the world would be cheaper than running pre-existing coal or gas-fired power plants. To put it another way, the analysis found that a new solar or wind plant would be able to compete on better footing with coal or gas-powered facilities in countries representing about 46% of the world’s population.
This is also in spite of the fact that renewable energy is becoming more expensive, with the rising prices of polysilicon, used in solar panels, and steel, used in wind turbines. Despite both these raw materials seeing surging prices, up threefold in 2020 for polysilicon and due to rise by 17% this year for steel (according to BNEF), renewable energy is still continuing to be popular. This popularity paves the way for solar and wind energy to remain competitive in terms of price as well, since solar panel prices fell 4% from late 2020 to about $38 per MW hour, for instance. As such, the renewables sector, and solar power, in particular, are becoming popular with investors. We thus compiled a list of the best solar stocks for 2021. The stocks added to our list were selected on the basis of hedge fund popularity, fundamentals, analysts’ ratings, and future growth potential based on core business strengths.
Just like the conventional energy industry, the finance industry is also going through drastic changes. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 28th, 2021, our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, let’s now look at the 12 best solar stocks for 2021.
Best Solar Stocks for 2021
12. ReneSola Ltd (NYSE: SOL)
Number of Hedge Fund Holders: 3
ReneSola Ltd (NYSE: SOL) is a solar power provider operating through three segments: Solar Power Project Development, EPC services, and Electricity Generation Revenue. The company also develops community solar gardens, sells project rights, and operates about 100 solar power projects with 173 MW in aggregate capacity, as of December 31st, 2020. It ranks 12th on our list of the best solar stocks for 2021.
ReneSola Ltd (NYSE: SOL) raised its revenue in the first quarter to a large extent because of projects in Hungary and Utah. The income for the quarter rose to $3 million, a big improvement from the net loss of $2 million in the first quarter of 2020. In Q1 2021, ReneSola Ltd’s (NYSE: SOL) EPS was $0.05, beating estimates by $0.07. Its revenue came in at $22.77 million, representing a 7.62% growth year over year and beating estimates by $2.77 million. ReneSola Ltd (NYSE: SOL) also has a gross profit margin of 25.18%
By the end of the first quarter of 2021, 3 hedge funds out of the 866 tracked by Insider Monkey held stakes in ReneSola Ltd (NYSE: SOL). The total value of their stakes was roughly $146 million. This is compared to the previous quarter’s 3 hedge fund holders with a total stake value of approximately $138 million. Like NextEra Energy, Inc. (NYSE: NEE), Brookfield Renewable Partners L.P. (NYSE: BEP), and Enphase Energy, Inc. (NASDAQ: ENPH), ReneSola Ltd (NYSE: SOL) is a good renewable energy stock to invest in.
11. Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN)
Number of Hedge Fund Holders: 6
Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN) is a designer and manufacturer of solar panels and other solar system components across the world. The company offers interdigitated back contact and shingled solar cells and panels under the SunPower brand and ranks 11th on our list of the best solar stocks for 2021.
This June, Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN) announced a flagship installation using its advanced solar tech to power the new international logistics “hub” owned by Kering. The installation is due to be completed in August, and its news has resulted in Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN) trading higher. In the first quarter of 2021, Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN) had an EPS of -$1.38, beating estimates by $0.07, while its $165.42 million revenue beat estimates by $5.13 million.
By the end of the first quarter of 2021, 6 hedge funds out of the 866 tracked by Insider Monkey held stakes in Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN). The total value of their stakes was roughly $12.2 million. This is compared to the previous quarter’s 7 hedge fund holders with a total stake value of approximately $32.9 million.
Like NextEra Energy, Inc. (NYSE: NEE), Brookfield Renewable Partners L.P. (NYSE: BEP), and Enphase Energy, Inc. (NASDAQ: ENPH), Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN) is a good renewable energy stock to invest in.
10. Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI)
Number of Hedge Fund Holders: 16
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) provides capital and services to the renewable energy and other sustainable infrastructure markets. The company focuses on grid-connected projects to deploy cleaner energy sources such as solar and wind for power generation and ranks 10th on our list of the best solar stocks for 2021.
This May, Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) stated that it expected a 7-10% growth in its distributable EPS on a compounded annual basis by 2023. It also said that annual dividend growth was expected to be at a compound annual of 3-5%. In the first quarter of 2021, Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) had an FFO of $0.43, beating estimates by $0.04. Its revenue for the quarter was $24.11 million, showcasing a 6.23% growth year over year and beating estimates by $1.38 million. The stock has gained 102.06% in the past year. The company has a gross profit margin of 100%.
By the end of the first quarter of 2021, 16 hedge funds out of the 866 tracked by Insider Monkey held stakes in Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI). The total value of their stakes was roughly $117 million. This is compared to the previous quarter’s 12 hedge fund holders with a total stake value of approximately $94.5 million. Like NextEra Energy, Inc. (NYSE: NEE), Brookfield Renewable Partners L.P. (NYSE: BEP), and Enphase Energy, Inc. (NASDAQ: ENPH), Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) is a good renewable energy stock to invest in.
9. Daqo New Energy Corp. (NYSE: DQ)
Number of Hedge Fund Holders: 17
Daqo New Energy Corp. (NYSE: DQ) and its subsidiaries manufacture polysilicon for photovoltaic products in China. The company’s polysilicon is processed into ingots, wafers, cells, and modules for solar power generation, and it offers ready-to-use polysilicon packaged for crucible stacking, pulling, and solidification products. It ranks 9th on our list of the best solar stocks for 2021.
On June 25th, as Daqo New Energy Corp. (NYSE: DQ) rebounded from the previous day’s losses, analysts, such as those from Citigroup, commented that the company would be minimally impacted by the US solar material ban on China. Earlier this month, Daqo New Energy Corp. (NYSE: DQ) traded higher after announcing its intention to apply for an IPO of its subsidiary, Xinjiang Daqo New Energy. The company also gave second-quarter guidance on the relevant subsidiary’s revenues, expecting at least $386.2 million in revenue.
In the first quarter of 2021, Daqo New Energy Corp. (NYSE: DQ) had an EPS of $1.08, beating estimates by $0.19, and its revenue was $256.1 million, representing a 51.69% growth year over year but missing estimates by $41.87 million. The stock has gained 18.96% in the past 6 months, 6.48% year to date, and has a forward PE ratio of 8.36.
By the end of the first quarter of 2021, 17 hedge funds out of the 866 tracked by Insider Monkey held stakes in Daqo New Energy Corp. (NYSE: DQ). The total value of their stakes was roughly $129 million. This is compared to the previous quarter’s 18 hedge fund holders with a total stake value of approximately $123 million. Like NextEra Energy, Inc. (NYSE: NEE), Brookfield Renewable Partners L.P. (NYSE: BEP), and Enphase Energy, Inc. (NASDAQ: ENPH), Daqo New Energy Corp. (NYSE: DQ) is a good renewable energy stock to invest in.
8. Canadian Solar Inc. (NASDAQ: CSIQ)
Number of Hedge Fund Holders: 17
Canadian Solar Inc. (NASDAQ: CSIQ) manufactures solar ingots, wafers, cells, modules, and other solar power products. The company has two segments: Module and System Solutions and Energy. It ranks 8th on our list of the best solar stocks for 2021.
On June 28th, Canadian Solar Inc. (NASDAQ: CSIQ) announced plans for an IPO and share listing on the Shanghai Stock Exchange Sci-Tech board by the name of STAR Market. The company mentioned that its subsidiary CSI Solar would be issuing about 541 million shares, and it expects to hold approximately 64% of them. Earlier this month, Canadian Solar Inc. (NASDAQ: CSIQ) also acquired a $59.7 million facility to support growth in the global energy business. The company is also planning to expand project development pipelines in Africa, Europe, and the Middle East.
In the first quarter of 2021, Canadian Solar Inc. (NASDAQ: CSIQ) had an EPS of $0.36, missing estimates by $0.03, and revenue of $1.09 billion. The latter represented a 31.94% growth year over year and beat estimates by $49.14 million. The stock has gained 142.38% in the past year as well, while the company has a 17.68% gross profit margin.
By the end of the first quarter of 2021, 17 hedge funds out of the 866 tracked by Insider Monkey held stakes in Canadian Solar Inc. (NASDAQ: CSIQ). The total value of their stakes was roughly $96.4 million. This is compared to the previous quarter’s 14 hedge fund holders with a total stake value of approximately $118 million. Like NextEra Energy, Inc. (NYSE: NEE), Brookfield Renewable Partners L.P. (NYSE: BEP), and Enphase Energy, Inc. (NASDAQ: ENPH), Canadian Solar Inc. (NASDAQ: CSIQ) is a good renewable energy stock to invest in.
7. SunPower Corporation (NASDAQ: SPWR)
Number of Hedge Fund Holders: 18
SunPower Corporation (NASDAQ: SPWR) is a solar power company operating globally. The company has three segments: Residential, Light Commercial, Commercial and Industrial Solutions, and Others, and offers commercial roof, carport, and ground-mounted systems. It ranks 8th on our list of the best solar stocks for 2021.
On June 2nd, SunPower Corporation’s (NASDAQ: SPWR) de-levered its balance sheet by retiring the 2021 convertible bond. The move has given the company room to capitalize on newer growth opportunities like expanding its residential market presence. The next day, the company’s CEO commented on the opportunities lying for the solar industry in the rooftop market of about 100 million US homes. In the first quarter of 2021, SunPower Corporation’s (NASDAQ: SPWR) EPS was $0.05, beating estimates by $0.03, and its revenue came in at $305.78 million, missing estimates by $0.98 million. The stock has gained 22.77% in the past 6 months and 19.95% year to date. SunPower Corporation’s (NASDAQ: SPWR) has a gross profit margin of 16.41%.
By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in SunPower Corporation (NASDAQ: SPWR). The total value of their stakes was roughly $182 million. This is compared to the previous quarter’s 24 hedge fund holders with a total stake value of approximately $345 million. Like NextEra Energy, Inc. (NYSE: NEE), Brookfield Renewable Partners L.P. (NYSE: BEP), and Enphase Energy, Inc. (NASDAQ: ENPH), SunPower Corporation’s (NASDAQ: SPWR) is a good renewable energy stock to invest in.
6. First Solar, Inc. (NASDAQ: FSLR)
Number of Hedge Fund Holders: 24
First Solar, Inc. (NASDAQ: FSLR) is a renewable energy company focusing on solar power. It provides photovoltaic solar energy solutions in the US, Japan, France, Canada, India, Australia, and internationally. The company operates through its Modules and Systems segments and ranks 6th on our list of the best solar energy stocks to invest in.
On June 24th, First Solar, Inc. (NASDAQ: FSLR) was notably trading its highest since January in light of President Biden’s ban on Chinese solar products from Xinjiang. Since the ban impacted the import of silica-based products, First Solar, Inc. (NASDAQ: FSLR) has managed to benefit as the company does not use polysilicon so more orders are due to pile in from utility-scale developers, according to Cowen analyst Jeff Osborne. Earlier this month, Citi analysts raised EBITDA estimates for the stock from $555 million to $625 million, because of First Solar, Inc.’s (NASDAQ: FSLR) increased module production. The firm has a Buy rating alongside the $100 price target put on the stock. BofA upgraded First Solar, Inc. (NASDAQ: FSLR) to Buy this May, with a $91 price target, in light of the company’s positive earnings in the first quarter.
In the first quarter of 2021, First Solar, Inc. (NASDAQ: FSLR) had an EPS of $0.81, missing estimates by -$0.03, and its revenue came in at $803.37 million at a 50.97% increase year over year. The revenue also beat estimates by $86.34 million. The stock has also gained 87.05% in the past year, while First Solar, Inc. (NASDAQ: FSLR) also has a gross profit margin of 27.25%.
By the end of the first quarter of 2021, 24 hedge funds out of the 866 tracked by Insider Monkey held stakes in First Solar, Inc. (NASDAQ: FSLR). The total value of their stakes was roughly $304 million. This is compared to the previous quarter’s 34 hedge fund holders with a total stake value of approximately $406 million. Like NextEra Energy, Inc. (NYSE: NEE), Brookfield Renewable Partners L.P. (NYSE: BEP), and Enphase Energy, Inc. (NASDAQ: ENPH), First Solar, Inc. (NASDAQ: FSLR) is a good renewable energy stock to invest in.
White Brook Capital, an investment management firm, mentioned First Solar, Inc. (NASDAQ: FSLR) in their first quarter 2021 investor letter. Here‘s what they said:
“First Solar (FSLR) and Itron (ITRI), both of which I’ve written about in past In Focus sections were long-term positions that were sold as their prices exceeded price targets. Both are solid companies that remain on my watchlist, but the opportunity cost of not investing in other potential investments exceeded their potential mid-term returns.”
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Disclosure: None. 12 Best Solar Stocks for 2021 is originally published on Insider Monkey.
