We recently compiled a list of the 7 Most Undervalued Solar Stocks to Buy According to Analysts. In this article, we are going to take a look at where Canadian Solar (NASDAQ:CSIQ) stands against the other undervalued solar stocks.
Global Solar Energy Market Poised for Explosive Growth
According to a report by Precedence Research, the global solar energy systems market is valued at $255.40 billion in 2024 and is projected to grow to $1.14 trillion by 2034 at a CAGR of 16.4%. The market has undergone significant transformation in recent years, driven by the increasing global focus on sustainable and renewable energy sources. Governments worldwide have implemented policies and incentives, such as tax credits, subsidies, and net metering programs, which are driving growth in the solar panel market.
However, the market faces challenges related to cost and grid integration, as excess solar energy must be either transmitted back into the grid or stored in batteries. Integrating solar energy into existing energy networks is technically complex and requires infrastructure to handle two-way energy flows, while the costs of establishing large-scale energy storage systems are high, limiting the economic sustainability of solar energy systems.
The North American region is experiencing growth fueled by technological advancements, environmental concerns, supportive policies, and increasing consumer demand for clean and sustainable energy. The United States is a leading player in the North American solar energy market, with substantial growth in residential and utility solar installations. In 2022, the country added 14.1 GWh of energy storage to the electrical grid, marking a 34% year-over-year increase.
However, the Asia Pacific region is currently leading the market and is poised for continued growth, driven by governments and industries striving to meet renewable energy targets. India, aiming for 450 GW of renewable capacity by 2030, is expected to be a key driver of market growth in the region. Notably, the International Energy Agency predicts that solar power in India will surpass coal’s share in the country’s power-generating mix within the next 20 years.
Economic Benefits Driving the Growth in the Solar Industry
Abigail Ross Hopper, President of the Solar Energy Industries Association, expressed her excitement about the growth prospects of the solar industry. According to her projections, the industry is expected to grow by 52% in the near future, doubling its size. This growth is driven by increasing demand for low-energy prices, particularly in states like Texas and Florida, which are not typically known for their environmental politics but are eager to reduce their energy costs. Hopper emphasized that the solar industry’s growth is not limited to California, which currently has the most solar installations in the country, but is also gaining traction in other states.
Hopper acknowledged the backlash against Environmental, Social, and Governance (ESG) initiatives, including the green transition, but emphasized that the focus on solar energy is driven by its economic benefits, particularly lower prices. She noted that customers, including utilities, corporations, and homeowners, are increasingly turning to solar energy as a way to reduce their energy costs.
As the world continues to transition towards a more sustainable and renewable energy future, the solar energy market is poised for rapid growth and expansion. With that in context, let’s take a look at the 7 most undervalued solar stocks to buy, according to analysts.
Our Methodology
To compile our list of the 7 most undervalued solar stocks to buy according to analysts, we used the Finviz and Yahoo stock screeners to find solar companies cheaper than the S&P 500 Index as of October 4 (forward P/E of 23 as per WSJ). We then narrowed our choices to 7 stocks according to analyst upside potential. We also included their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in ascending order of their upside potential as of October 4.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A fleet of solar power plants under the dazzling sun, shooting off a burst of light.
Canadian Solar (NASDAQ:CSIQ)
Upside Potential as of October 4: 29.26%
Number of Hedge Fund Investors: 10
Forward P/E Ratio as of October 4: 21.40
Canadian Solar (NASDAQ:CSIQ) is a leading global solar technology and renewable energy company. The company designs, manufactures, and sells solar photovoltaic modules and offers solar energy and battery storage solutions. Canadian Solar (NASDAQ:CSIQ) operates two primary business segments: CSI Solar, focused on manufacturing solar products, and Recurrent Energy, a developer of solar and storage solutions. Canadian Solar (NASDAQ:CSIQ) has a strong presence in North America, Europe, and Asia.
The global battery energy storage market is expected to experience significant growth, with a projected value of $25.6 billion by 2029, up from $7.8 billion in 2024, at a CAGR of 26.9%, according to a report by Markets and Markets. Canadian Solar (NASDAQ:CSIQ) has made significant advancements in the energy storage sector, offering integrated storage solutions that combine its solar modules with battery storage technologies, enabling more efficient energy use.
Canadian Solar’s (NASDAQ:CSIQ) energy storage segment has seen impressive growth, driven by rising demand for energy storage solutions worldwide. The company’s energy storage business has developed a strong pipeline of projects globally, with several key installations already operational and more in the pipeline. As of Q2, Canadian Solar (NASDAQ:CSIQ) has a contracted pipeline of over 31 GWh for storage projects.
Canadian Solar (NASDAQ:CSIQ) is trading at a 9.66% discount to its sector median of 23.68, with a forward P/E multiple of 21.40. The company’s stock is owned by 10 hedge funds, with a total value of $48.12 million as of the second quarter. Industry analysts have reached a consensus on the stock’s Buy rating, with an average target price of $20.33 that suggests an almost 30% upside potential from its current levels.
Overall CSIQ ranks 5th on our list of the most undervalued solar stocks to buy according to analysts. While we acknowledge the potential of CSIQ as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CSIQ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
