In this article, we will take a look at the five best solar stocks to buy now. If you want to read about more stocks and the industry itself, then head on over to 11 Best Solar Stocks to Buy Now.
5. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 26
First Solar, Inc. (NASDAQ:FSLR) is an American photovoltaic solar product provider that is headquartered in Tempe, Arizona. The company provides solar modules that convert solar energy into electricity and it sells its products to both residential and commercial customers.
First Solar, Inc. (NASDAQ:FSLR) is one of the largest beneficiaries of the Inflation Reduction Act that was passed in the United States Senate earlier this month. The bill will provide $40 billion in assistance to solar manufacturers, and First Solar, Inc. (NASDAQ:FSLR) already has a manufacturing footprint in the U.S. and plans to increase it because of the new legislation. First Solar, Inc. (NASDAQ:FSLR) is also on a strong bookings track this year, as its 44 GW of expected shipments in the first half is twice what it shipped in 2021. Additionally, most of its products have already been booked until 2024, indicating that there is a strong demand that is unlikely to die down. Additionally, the company is expected to grow its sales by 26% and 28% in 2023 and 2024, respectively.
Piper Sandler increased First Solar, Inc. (NASDAQ:FSLR)’s share price target to $165 from $120 in August 2022 as it shared that the firm had a strong Q2 and manufacturing tax credits will drive its sales. 26 of the 895 hedge funds part of Insider Monkey’s Q2 2022 survey had held a stake in the company.
First Solar, Inc. (NASDAQ:FSLR)’s largest investor is D. E. Shaw’s D E Shaw which owns 881,545 shares that are worth $68 million.
4. Array Technologies, Inc. (NASDAQ:ARRY)
Number of Hedge Fund Holders: 26
Array Technologies, Inc. (NASDAQ:ARRY) is an American company that provides a solar tracking system based on machine learning software that identifies optimal positions for a solar array to generate electricity. The company is headquartered in Albuquerque, New Mexico.
Array Technologies, Inc. (NASDAQ:ARRY) is a key supplier to the electric utility industry, and since California has mandated that all utilities have to be 100% carbon free by 2045, the company will continue to see strong demand for its products. Its trackers improve electricity output by 25%, and the tracker industry itself is expected to stand at $21 billion by 2028 – ensuring a strong market for its products. Following an acquisition earlier this year, Array Technologies, Inc. (NASDAQ:ARRY) is also the largest solar tracking company in the world.
Truist raised Array Technologies, Inc. (NASDAQ:ARRY)’s share price target to $23 from $13 in August 2022, outlining that while its recent quarterly performance was impressive, there is still some uncertainty about margins. Insider Monkey profiled 895 hedge funds for this year’s first quarter and discovered that 26 had held a stake in the company.
Out of these, Jos Shaver’s Electron Capital Partners is Array Technologies, Inc. (NASDAQ:ARRY)’s largest investor. It has a $59 million stake that comes through 5.3 million shares.
3. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 36
Sunrun Inc. (NASDAQ:RUN) is an American residential solar energy systems provider. It provides products such as panels, racks, solar leads, and battery storage. The firm is headquartered in San Francisco, California.
A risk reward tradeoff matrix analysis of Sunrun Inc. (NASDAQ:RUN)’s shares with its peers and the S&P 500 index reveals that the company is the least risky except for the S&P and has some of the highest potential upside. The company’s latest quarterly report saw it grow its revenues by a whopping 48% annually, and analyst projections estimate it to grow its revenue at an average of 13% over the course of the next four years. To further improve matters, this growth is still below the industry CAGR estimates of 25.7% for 2028.
Morgan Stanley increased Sunrun Inc. (NASDAQ:RUN)’s share price target to $79 from $70 in August 2022, highlighting that the Inflation Reduction Act will boost the company’s fortunes. As the second quarter of this year ended, 36 of the 895 hedge funds surveyed by Insider Monkey had held the company’s shares.
Sunrun Inc. (NASDAQ:RUN)’s largest investor is William B. Gray’s Orbis Investment Management which owns 12 million shares that are worth $303 million.
2. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 40
SolarEdge Technologies, Inc. (NASDAQ:SEDG) designs and sells DC inverter systems for solar power installations. The company has its customers located all over the globe and some of its products include inverters, power optimization systems, communications systems, and a cloud based monitoring platform. It is headquartered in Herzliya, Israel.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) has consistently grown its revenues over the last ten years, with a growth rate higher than 30% for eight of the ten years (including the most recent ones). Additionally, and for some eye popping figures, the company has its eye on the global expansion of the solar market, and by 2021 end it had grown its megawatts shipped outside Europe and North America by a whopping 511% over 2017. SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s earnings per share are slated to grow by an average of 29% according to analysts, indicating that the best is yet to come.
JPMorgan raised SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s share price target to $419 from $373 in August 2022. Insider Monkey’s June 2022 survey of 895 hedge funds outlined that 40 had held a stake in the company.
Ian Simm’s Impax Asset Management is SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s largest investor. It owns 80,909 shares that are worth $158 million.
ClearBridge Investments mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“We are well-positioned to participate in the accelerating energy transition. High and rising utility costs combined with policy support are driving increased penetration of home solar plus storage systems in Europe. Israel-based SolarEdge Technologies (NASDAQ:SEDG) expects to see significant growth in solar installations in this market led by Germany and Italy, among others, where consumers are not only demanding solar on the roof but a complete system solution including batteries. This phenomenon is accelerating revenue growth for these companies.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is one of the largest renewable energy companies in the world. While the firm is primarily known for its cars, it also sells solar energy generation and storage products to commercial, residential, and industrial users.
Tesla, Inc. (NASDAQ:TSLA) is one of the leaders in the battery energy storage space, as the company has a myriad of software products that cater to its customer needs. These include options such as Autobidder, Powerhub, and Microgrid Controller, which target users such as utilities and homeowners, Tesla, Inc. (NASDAQ:TSLA)’s second quarter was also the first time that the company posted a gross profit from its energy generation and storage segment through a massive 41% annual growth.
Canaccord raised Tesla, Inc. (NASDAQ:TSLA)’s share price target to $881 from $815 in August 2022, as it stated that the company’s solar and energy offerings will ensure that it remains a “sustainability behemoth”. For their June quarter of 2022 holdings, 72 out of the 895 hedge funds part of Insider Monkey’s research had invested in the company.
Out of these, Catherine D. Wood’s ARK Investment Management is Tesla, Inc. (NASDAQ:TSLA)’s largest investor. It owns 1 million shares that are worth $1 billion.
Baron Funds mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
- First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;
- second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful.
Regardless, I was right to have spoken with Roger. That was since he outlined numerous issues we needed to consider, study, and question before we determined whether we believed Tesla could be a successful business…before we ultimately chose whether to invest in that company.
When we completed our initial due diligence on Tesla, which diligence has been ongoing since 2014, we decided to invest $360 million in Tesla over the next two years. I then called Roger and outlined why I thought we could earn 20 times our capital over the next 10 years. Roger was so certain I was wrong that he offered to bet me $1 million that Tesla would fail. “Roger, I can’t bet you a million dollars. First, if you are right, I couldn’t afford to pay you. Second, if I’m right, you’re my friend, and I couldn’t take your money.” We settled on a dinner bet…” (Click here to see the full text)
Disclosure: None. You can also take a look at 7 Best Stocks to Buy According to Stephen Feinberg’s Cerberus Capital Management and 10 Utilities Stocks with Over 3% Dividend Yield.
