5 Solar Stocks Billionaires Are Loading Up On

In this article, we discuss 5 solar stocks billionaires are loading up on. If you want to see more stocks in this selection, check out 10 Solar Stocks Billionaires Are Loading Up On. 

5. Daqo New Energy Corp. (NYSE:DQ)

Number of Hedge Fund Holders: 21

Number of Billionaire Investors: 10

Daqo New Energy Corp. (NYSE:DQ) specializes in the production and distribution of polysilicon for manufacturers of photovoltaic products in the People’s Republic of China. It is one of the top solar stocks found in the investment portfolios of billionaires. In Q1 2023, 10 billionaires held stakes in Daqo New Energy Corp. (NYSE:DQ). 

On May 4, Daiwa analyst Dennis Ip upgraded Daqo New Energy Corp. (NYSE:DQ) to Outperform from Hold with a $45 price target.

According to Insider Monkey’s first quarter database, 21 hedge funds were bullish on Daqo New Energy Corp. (NYSE:DQ), compared to 20 funds in the prior quarter. Billionaire Lei Zhang’s Hillhouse Capital Management is the largest stakeholder of the company, with 2 million shares worth $95.4 million. 

4. Sunrun Inc. (NASDAQ:RUN)

Number of Hedge Fund Holders: 27

Number of Billionaire Investors: 10

Sunrun Inc. (NASDAQ:RUN) is involved in multiple aspects of residential solar energy systems. The company’s activities include designing, developing, installing, selling, owning, and maintaining these solar energy systems. In Q1 2023, 10 billionaires held positions in Sunrun Inc. (NASDAQ:RUN). 

On May 8, Truist analyst Jordan Levy maintained a Buy rating on Sunrun Inc. (NASDAQ:RUN) but trimmed the firm’s price target on the shares from $35 to $30. The stock’s decline after Sunrun Inc. (NASDAQ:RUN) reported a larger than expected loss in Q1 can be attributed to increased spending, unchanged growth projections, the absence of detailed guidance, and general concerns about interest rates. Truist acknowledged a slowdown in California, but believes that Sunrun Inc. (NASDAQ:RUN)’s sales efforts in Q1 will continue to generate momentum throughout the majority of the second half of the year, as non-California regions show signs of strong activity.

According to Insider Monkey’s first quarter database, 27 hedge funds were bullish on Sunrun Inc. (NASDAQ:RUN), compared to 39 funds in the prior quarter. Billionaire Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with a position worth $77.5 million. 

Here is what Horizon Kinetics has to say about Sunrun Inc. (NASDAQ:RUN) in its Q2 2021 investor letter:

“What this table did not cover is valuation. What’s expensive, what’s cheap? A good business that is too expensive is not a good investment. The most expensive business on the table is Sunrun. Sunrun is the nation’s largest residential rooftop solar panel system seller/installer. Sunrun’s valuation might also shed Thumbnail valuation.

To start at the top of the income statement, Sunrun shares trade at 10.3x revenues. The most profitable company in the S&P 500, Microsoft, trades at 13x revenues. Sunrun operates at a loss. Obviously, not only is tremendous growth anticipated, but tremendous profitability, too.

Let’s simply accept that investors have correctly anticipated Sunrun’s future success and make that the starting point for a valuation exercise.

If, 10 years from now, Sunrun is ultimately valued at 25x net income, and if today’s $9.5 billion valuation is appropriate, that would require $380 million of net income ($9,500 million ÷ 25).

Let’s say Sunrun will have the same net profit margin as the average S&P 500 company, which is 10%. That means it would need $3,800 million of sales to generate that level of earnings ($380 mill ÷ 10%).

Since sales are now $920 million, they would have to rise by 4.1x in the next 10 years. That would require annual sales growth of 15.2%. (Click here to read full text)

3. Enphase Energy, Inc. (NASDAQ:ENPH)

Number of Hedge Fund Holders: 55

Number of Billionaire Investors: 12

Enphase Energy, Inc. (NASDAQ:ENPH) is involved in the design, development, manufacturing, and sale of home energy solutions for the solar photovoltaic sector. In the first quarter of 2023, Enphase Energy, Inc. (NASDAQ:ENPH) was found in 12 billionaire portfolios. 

On April 25, Enphase Energy, Inc. (NASDAQ:ENPH) reported a Q1 non-GAAP EPS of $1.37 and a revenue of $726.02 million, outperforming Wall Street estimates by $0.15 and $5.51 million, respectively. In Q2 2023, the company expects revenue to be within a range of $700 million to $750 million, which includes shipments of 80 to 100 megawatt hours of Enphase IQ Batteries. 

Following the release of Enphase Energy, Inc. (NASDAQ:ENPH)’s Q1 results, Barclays analyst Christine Cho maintained an Equal Weight rating on the shares but revised down the price target for the shares from $248 to $226. Barclays believes that Enphase Energy, Inc. (NASDAQ:ENPH) is well-positioned to capture a larger market share in the residential sector, particularly in Europe.

According to Insider Monkey’s first quarter database, 55 hedge funds were bullish on Enphase Energy, Inc. (NASDAQ:ENPH), compared to 63 funds in the prior quarter. Billionaire Philippe Laffont’s Coatue Management is a prominent stakeholder of the company, with 714,442 shares worth $150.2 million.

Aristotle Atlantic Large Cap Growth Strategy made the following comment about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q1 2023 investor letter:

“Enphase Energy, Inc. (NASDAQ:ENPH) designs, develops, manufactures and sells home energy solutions in the U.S. and internationally for the solar industry. The company is the world’s leading manufacturer of microinverters that convert solar-generated D.C. energy to A.C. energy usable in homes and buildings. Enphase introduced the world’s first microinverter system in 2008 and has expanded its offerings to include battery storage systems and proprietary technologies that provide energy monitoring and control services for solar energy systems. It sells its products and solutions directly to solar system distributors, large installers and strategic partners.

We see Enphase having a substantial market share that is gained through a premium product offering, superior customer service and the development of a large and diverse network of solar installers and distributors. The company’s products and services address a growing residential solar market. Coupling battery backup systems with existing and newly installed residential solar systems could accelerate the company’s revenue and earnings growth over the next several years, in our view. Additionally, commercial and international expansion offer additional revenue and earnings upside. Enphase also plans to expand manufacturing capacity in the U.S. during 2023 to benefit from tax incentives related to domestic production included in the Inflation Reduction Act (IRA).”

2. First Solar, Inc. (NASDAQ:FSLR)

Number of Hedge Fund Holders: 39

Number of Billionaire Investors: 13

First Solar, Inc. (NASDAQ:FSLR) offers solar energy solutions using photovoltaic (PV) technology. The company specializes in designing, manufacturing, and selling solar modules made of cadmium telluride, which efficiently convert sunlight into electricity. In Q1 2023, First Solar, Inc. (NASDAQ:FSLR) was part of 13 billionaire portfolios. 

On May 31, Argus analyst Kristina Ruggeri maintained a Buy rating on First Solar, Inc. (NASDAQ:FSLR) and assigned a price target of $261. Additionally, Ruggeri raised the firm’s earnings per share projection for FY24 to $11.97, up from $11.16. This forecast indicates a potential increase of nearly 65% compared to the estimated earnings for FY23. The analyst explained that First Solar, Inc. (NASDAQ:FSLR) is expected to benefit from rising demand due to its customers becoming eligible for tax credits if their projects meet U.S. content requirements. 

According to Insider Monkey’s first quarter database, 39 hedge funds were long First Solar, Inc. (NASDAQ:FSLR), compared to 44 funds in the prior quarter. Billionaire David Elliot Shaw’s D E Shaw held a prominent stake in the company, comprising 506,539 shares worth $110 million. 

Here is what White Brook Capital had to say about First Solar, Inc. (NASDAQ:FSLR) in its Q1 2021 investor letter:

“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.”

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 82

Number of Billionaire Investors: 15

Tesla, Inc. (NASDAQ:TSLA)’s Energy Generation and Storage segment is responsible for the design, manufacture, installation, commercialization, and leasing of solar energy generation and energy storage products, as well as related services to residential, commercial, and industrial customers. It is one of the top solar stocks on the radar of billionaires. 

Barclays analyst Dan Levy believes that Tesla, Inc. (NASDAQ:TSLA)’s future is characterized by significant growth potential, expecting the company to achieve substantial volume growth and market share gains in the coming years. Levy forecasts that by 2030, Tesla, Inc. (NASDAQ:TSLA)’s volume will reach 6.2 million units, with a global market share of 7%. While Tesla is well-positioned to benefit from the global shift toward electric vehicles and is a leader in software-defined vehicles, the company needs to address the issue of model concentration as it expands its volume. Barclays maintained an Overweight rating on Tesla, Inc. (NASDAQ:TSLA)’s shares with a price target of $220 on May 30. 

According to Insider Monkey’s first quarter database, 82 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA), compared to 91 funds in the prior quarter. Billionaire David Shaw’s D E Shaw is a prominent stakeholder of the company, with 6.2 million shares worth $1.3 billion. 

Baron Opportunity Fund made the following comment about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2023 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells EVs, related software and components, and solar and energy storage products. Following a sharp decline at the end of 2022, Tesla’s stock rebounded in the first quarter of 2023 on investor expectations that Tesla will continue to grow vehicle deliveries and maintain solid gross and operating margins despite a potential recession, competition in China, and vehicle price reductions. We wrote a long piece on Tesla last quarter and refer readers back to it, because for long-term investors not much has changed over the last three months. Tesla did hold its first Investor Day in March, and several Baron analysts and portfolio managers attended. We toured the Austin Gigafactory, drove in a Cybertruck, boarded a Semi truck, and spoke with a wide swath of Tesla senior managers. During the formal presentation, Tesla highlighted, among other things: (1) its broad and deep bench of executive talent supporting CEO Elon Musk; (2) its “Master Plan 3–Sustainable Energy for All of Earth,” which featured EVs, renewable power from solar and wind, and stationary electric storage; (3) its vehicle assembly innovations, including massive casted parts (building Model Y bodies with single front and rear castings, replacing a substantial number of parts and fastening steps), a stainless steel exoskeleton (for Cybertruck), and its next-generation highly efficient “unboxed process” for its next-gen $25,000 vehicle; (4) a future permanent[1]magnet electric motor that will not require any rare earths; and (5) the massive untapped market opportunity for commercial stationary electric storage, branded Megapack, as the world steadily shifts to renewable energy. As long-term shareholders, we have witnessed Tesla exploit its innovative Model 3/Y now-global mass-market platform to increase vehicle deliveries from barely a standing start to over 1.3 million units, while achieving industry-leading margins and reinforcing its iron-clad balance sheet to almost $23 billion in cash (and effectively no recourse debt). We expect Tesla’s next-generation EV and Megapack products to have a similar impact on company results.”

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