As climate change continues to affect the planet, there is a growing interest in renewable energy sources. One of the most promising renewable energy sources is solar power. If you’re wondering which stocks to buy, it’s important to know about these top solar companies.
Top Solar Companies in the World
The solar industry has a few different niches and each of these companies has developed strengths within these different areas. For investors who are new to the solar energy industry, reviewing the largest companies in the solar industry can be a helpful way to better understand the industry as a whole.
Solar Energy Industry
Fossil fuels like oil and natural gas are still the most used source of energy in the world, but the use of renewable energy sources, such as solar, has been rapidly increasing. According to a study by Zion Market Research, the solar panel industry will be worth 57.5 billion by 2022. Solar energy companies reside within many different sectors, including utilities, industrials, and energy. These companies develop, manufacture, and sell solar panels, inverters, batteries, and more.
The solar energy sectors have seen market declines recently, due to uncertainty of the current administration's approach to renewable energy. But even with the recent volatility in the solar energy industry, over the next five years, the solar energy industry is expected to double. Over 75% of people in the United States believe that utility providers should be investing more in renewable energy, especially solar energy. The growing desire for more renewable energy sources combined with the uncertainty of how the current administration's policies will affect the industry means that strong growth is expected from renewable energy over the long-term, but short-term success is uncertain.
High levels of competition and the need to be incredibly cost-effective have made it difficult for many solar energy companies to make a strong profit. These top companies have all managed to make a name for themselves within the highly competitive solar energy market.
First Solar (FSLR)
First Solar is a solar technology company based in Arizona. First Solar claims to have the “strongest balance sheet in the industry.” The company excels in improving solar panel efficiency and increasing manufacturing scale. First Solar’s thin-film technology is now the industry standard, due to its proven reliability and efficient energy generation. The company is well-positioned to remain an industry leader in this area. First Solar has a strong emphasis on Research and Development (R&D), with special focus on cost-effective strategies for improving energy yield and the stability of its grids.
The past year has been difficult for the solar power industry, with many companies seeing declines in their stock prices. First Solar is no exception—the price of First Solar stock price has recently dropped. Due to the high volatility, First Solar is not a good investment for those looking to make quick money off of the biggest stock gainers, but its current low stock price makes it a worthwhile investment to consider for those looking to invest in the best growth stocks.
SunPower is an industry leader in panel efficiency. SunPower focuses on providing the best solar panels to commercial and residential customers, always striving to offer more services to both residential and commercial solar panel installers. For example, the company is creating a tool that will allow homeowners to calculate solar panel costs, including how much homeowners could potentially save on their energy bills. Investors may also be interested in SunPower’s new A-Series solar panel. These new and improved solar panels use bigger solar cells. SunPower has also significantly cut costs by improving the production process of these panels. Investors expect this increased energy efficiency to improve the company’s margins.
Though SunPower is historically volatile and is not currently profitable, it does have a technological advantage over competitors. Investors playing the long game hope that the technological investments SunPower is making now will help it gain a bigger portion of the solar industry. SunPower is also one of the top solar companies working on energy storage solutions.
Canadian Solar (CSIQ)
As the name implies, Canadian Solar is based in Canada. The company designs, creates, and sells a large variety of solar products, such as solar ingots, wafers, solar cells, and solar modules. The company also works in solar development and has seen success in this area. Canadian Solar has a higher manufacturing capacity compared to all other publicly traded companies, beating other solar companies—including Chinese manufacturers—to reach scale. The company's high production volume could soon make it difficult for competitors to catch up.
One of the reasons that Canadian Solar stock stands out to investors is that, unlike many other companies in the solar power industry, Canadian Solar is actually profitable. Investors may also be interested in Canadian Solar’s second-quarter report, which was largely positive. The company reported a net income of $62.7 million in the second quarter of 2019, which is higher revenue than it has been in previous quarters.
Vivint Solar (VSLR)
In the United States, Vivint Solar is the second largest of all solar installers. Many solar companies focus on solar panels for commercial use or combined commercial and residential use. In contrast, Vivint Solar focuses exclusively on the residential space, operating as an installer and financier of solar panels for homes. In order to meet the needs of its residential clients, Vivint Solar has unique purchasing options for helping customers order its products. Most customers pay for solar installation with either a long-term solar lease or power purchase agreement. Vivint Solar keeps some of this value on its balance sheet but sells part of the tax benefits.
Like many other companies in the solar energy industry, Vivint Solar wants to increase its offerings. The company currently has plans to add new features and services, such as energy storage. Energy storage is an area that many solar energy companies are exploring. Investors will want to keep an eye on how the different solar companies are succeeding in this area. Only time will tell who ends up being the leader in this area of the solar industry.
Trina Solar is a manufacturer of solar power products for both the residential and commercial markets. Trina Solar was previously the world’s largest solar photovoltaic (PV) module maker. Although no longer the top producer of solar PV modules, the company still manufactures a high volume of ingots, cells, and modules. Trina Solar is based in China but has branches all over the world.
Trina Solar has a unique financial history. The company was founded in 1997 and went public in 2006. Then, in 2017, the company decided to go private again. Currently, Trina Solar remains private but has disclosed that it plans to go public once again. Even though you can’t currently purchase stock in this company, it’s an important solar company to watch since circumstances are likely to change.
Tesla recently launched a new version of its solar roof tiles, called the V3 Solar Roof. The Tesla solar roof differs from other solar products because instead of solar panels added onto a roof, solar technology is built into the roof. The roof is made up of tiles that are designed to look like the normal roof of a house. The company estimates that the cost for homeowners will be $21.85 per square foot of roof.
The first and second versions of the product have had many flaws. In fact, when Tesla first announced the concept of solar roof tiles, the panels they showed were actually props and did not work at all. Elon Musk, Tesla’s CEO, has admitted the company was “still figuring things out.” But Musk claims that this most recent third version has been greatly improved. Musk claims that within a few months, the company will be able to install 1,000 roofs a week, but to date there have been very few installations.
The Tesla solar roof comes with a twenty-five-year warranty. The individual tiles generate less energy than a solar panel of the same size, but since the panels can cover a wider area of the roof, the overall energy generated is greater. This rooftop solar tiles concept certainly has potential, but investors should tread cautiously until it becomes clear whether Tesla’s third solar roof attempt will finally succeed or if it will follow in its predecessor’s footsteps.
Best Solar ETFs
If you’re interested in investing in solar stocks, it may be difficult to know where you should start. The solar industry has shown signs of a strong future, but at this point, it’s impossible to know which company will have the most growth. So, which solar company should you choose? The answer may be a solar ETF.
A solar ETF can be a great way to start investing in the solar industry since it combines multiple solar companies into one investment that is managed for you. The following ETFs include some of the best solar companies.
- Invesco Solar ETF (TAN)
- Invesco WilderHill Clean Energy ETF (PBW)
- First Trust Nasdaq Clean Edge Green Energy ETF (QCLN)
- VanEck Vectors Global Alternative Energy ETF (GEX)
- iShares Global Clean Energy ETF (ICLN)
Should I Invest in Solar Stocks?
Is investing in solar a good idea? How do you decide which stocks to buy? It does seem that green energy is an industry that will continue to grow. There’s clearly a huge demand for clean energy, such as solar power, and the technology that can make solar power more affordable, efficient, and reliable is rapidly improving.
As with any investment, it’s important to review the financial statements of a company prior to investing. You should also consider any investment within the context of your entire portfolio, such as investing in stocks that pay dividends if you have a dividend investing strategy, or investing in some of the most active stocks.
Even though it seems likely that the solar industry as a whole will see massive growth, that doesn’t mean every solar company will be part of this growth. Every sector of the stock market is affected by news headlines, and the solar industry is no exception. Solar power news will have a huge effect on solar power stocks in the coming years. This volatility is likely to make short term investments in the solar industry quite risky. Investing in solar ETFs may be the best strategy for those who want to start trading and investing in solar energy stocks.
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