Will The Sun Shine On These 3 Large-Cap Solar Stocks In 2023?

Key Points

• Enphase shares are up 4.12% in the past three months and up 73.34% in 2022, and the stock is holding above key price lines going into the new year.
• SolarEdge may be nearing a potentially bullish moving-average crossover.
• Analysts expect First Solar to earn $5.07 per share in 2023, which would be its best performance in years, as the company delivers on a backlog of orders.

As temperatures drop throughout the U.S., sunshine and warmth may seem like distant dreams. But for shareholders of top-performing solar-energy stocks such as Enphase Energy Inc. NASDAQ: ENPH, SolarEdge Technologies Inc. NASDAQ: SEDG, and First Solar Inc. NASDAQ: FSLR, those brighter days may be just around the corner.

All those stocks are poised to benefit from renewable energy tax credits included in the Inflation Reduction Act, which was signed into law this year. 

Enphase designs, develops and sells solar home energy products for the home and business markets. Its gear includes solar panels, batteries, and software bundled in one package that users control through an app. 

Enphase shares are up 4.12% in the past three months and 73.34% in 2022. It’s reasonable to think that the stock may have peaked with a gain like that, but Enphase’s chart indicates that it may be pausing before taking off again. 

The stock broke out of a cup-with-handle base on November 11, clearing a buy point above $316.87. On Thursday, the stock was trading at around $293, about 7.5% below its breakout price. 

That’s more than the broader market pulled back since November 11, but the stock does tend to be more volatile than the S&P 500. However, volatility is not necessarily detrimental, as it can push a stock higher. 

The stock is currently trading about 1.4% below its 50-day moving average. Analyst data compiled by MarketBeat show a “moderate-buy” rating on the stock, with a price target of $306.65, an upside of 4.51%. 

MarketBeat earnings data for Enphase reveal a history of beating top and bottom-line views going back to February 2019. The company next reports earnings on or around January 24, with Wall Street expecting a net income of $0.95 per share on revenue of $706.34 million. Both would mark increases over the year-earlier quarter. 

Moving-Average Support 

Fellow large-cap and S&P 500 component SolarEdge has also notched strong price gains this year, and shares are currently finding support at their 21-day moving average and holding 15% above their 50-day line.

The stock’s chart shows a potentially bullish crossover may be near: The 50-day line has languished below the 200-day average since mid-October, as the stock formed a cup-with-handle pattern that corrected 49%. As shares rallied 7.22% in the past month, the 50-day line turned higher. When it eventually crosses the 200-day line, it could signal that the SolarEdge is set to rally even further.

Wall Street is eyeing earnings of $8.16 per share in 2023, which would increase 87% over the expected $4.37 per share this year. Since the company’s most recent earnings report on November 7, six analysts upgraded their rating or boosted their price target, according to MarketBeat analyst data. Three lowered their target, and one initiated coverage with a “hold” rating. 

Among the large-cap U.S.-based solar-energy companies, First Solar has been the best price performer in the past 12 months, advancing 81.84% on a one-year basis. 

Missing Analyst Views

First Solar reported a loss in its most recent quarterly report in late October. Wall Street didn’t expect the company to be profitable in the quarter, but the loss of $0.46 per share on revenue of $629 million fell below views, as MarketBeat data show. 

So what’s caused the stock to move 19.54% higher in the past three months and to continue finding solid support along its 50-day moving average?

The company offered a full-year revenue outlook from $2.6 billion to $2.7 billion. The midpoint of that forecast came in above expectations for $2.6 billion, giving Wall Street some optimism. For 2023, analysts expect earnings of $5.07 per share, which would be its best performance in years, as the company delivers on a backlog of orders. 

These three solar energy stocks, as well as some smaller industry peers such as Array Technologies Inc. NASDAQ: ARRY, are flashing strong technical signals that could put them among the brightest lights of 2023.