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Investing in solar stocks
Solar energy is on the rise, but upfront consumer costs may hamper profitability.
As global attitudes toward fossil fuels continue to shift, the renewable energy sector becomes an increasingly attractive portfolio addition. But until technology costs come down, solar energy may remain a luxury in the eyes of most consumers.
What are solar stocks?
Solar stocks are stocks from companies involved in the generation of solar energy and the manufacturing of solar energy technology.
Solar energy is one of several forms of renewable energy — an emerging market category that continues to gain traction as we pivot from oil reliance to more sustainable energy technologies, including solar, wind, hydro, tidal and geothermal energy.
There are numerous companies in the solar energy space. These companies produce the technology that allows us to capture energy from the sun and convert it into electricity. The types of companies that fall within the solar energy category:
Manufacture solar modules and cells
Manufacture power optimizers and inverters
Install solar panels
Design solar power systems
Operate solar energy generators
Why invest in solar stocks?
Energy fuels our world. It’s a global resource we rely on and the way we produce and consume energy is changing. In light of growing environmental concerns, there has been a global shift from traditional energy stocks toward renewable energy. And solar power is a massive component of the renewable energy market.
According to Allied Market Research, the global solar energy market was worth $52.5 billion in 2018. And that figure is projected to rise to $223.3 billion by 2026. The market is changing. The demand for oil is dropping. And solar stocks present a potentially lucrative long-term growth opportunity.
Investing in renewable energy also gives you the opportunity to add assets to your portfolio that impact the environment in a positive way. Solar energy can help reduce carbon dioxide emissions and lessen our impact on the environment. If you’re looking to add some socially conscious investments to your portfolio, solar stocks fit the bill.
Risks of investing in solar energy
Two major concerns for investors interested in solar energy are expenses and manufacturing.
Right now, solar energy is expensive. It’s expensive to manufacture, it’s expensive to install and it’s expensive to maintain. And while the high cost of solar energy means higher profits for solar companies, it also acts as a deterrent for consumers. To outfit a residential home with solar panels, consumers can expect to pay about $3 per watt — which shakes out to about $15,000 to $30,000 for the installation, all told.
Solar energy is less of a novelty than it once was, which means it’s becoming more affordable as the technology advances. But it still has a ways to go before it’s as accessible and mainstream as fossil fuel.
Another concern for investors is how solar cells and modules are manufactured. Some of the components of solar technology require rare earth metals that are acquired as a byproduct of other mining processes. Should the demand increase, the supply chain could be threatened. Other solar materials make use of the same hazardous materials as electronics, which presents disposal challenges.
Before you buy in, investigate the companies you’re interested in backing to find out more about their manufacturing processes and protocols.
Solar stocks
There are a variety of companies in the solar energy category, including module developers, cell manufacturers, renewable energy generators and more.
Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.
Company summary
Brookfield Renewable Partners L.P. owns a portfolio of renewable power generating facilities primarily in North America, Colombia, Brazil, Europe, India, and China. The company generates electricity through hydroelectric, wind, solar, cogeneration, and biomass sources. Its portfolio consists of approximately 19,000 megawatts of installed capacity. Brookfield Renewable Partners Limited operates as the general partner of Brookfield Renewable Partners L.P. The company was formerly known as Brookfield Renewable Energy Partners L.P. and changed its name to Brookfield Renewable Partners L.P. in May 2016. Brookfield Renewable Partners L.P. was founded in 1999 and is headquartered in Hamilton, Bermuda.
Historical performance
Stock information
Market capitalization: $8294535168
P/E ratio: 115.5333
PEG ratio: 9.44
Dividend yield: 0.0383%
Company summary
Canadian Solar Inc., together with its subsidiaries, designs, develops, manufactures, and sells solar ingots, wafers, cells, modules, and other solar power products. The company operates through two segments, Module and System Solutions (MSS), and Energy. The MSS segment engages in the design, development, manufacture, and sale of a range of solar power products, including standard solar modules, specialty solar products, and solar system kits that are a ready-to-install packages comprising inverters, racking systems, and other accessories. It also provides engineering, procurement, and construction; and operation and maintenance (O&M) services. This segment's energy solution products include solar inverters and energy storage systems for utility, commercial, residential, and specialty product applications. Its O&M services include inspections, repair, and replacement of plant equipment; and site management and administrative support services for solar power projects. The Energy segment engages in the development and sale of solar power projects; and operation of solar power plants and sale of electricity. As of January 31, 2020, this segment had a fleet of solar power plants in operation with an aggregate capacity of approximately 880.2 MWp. The company's primary customers include distributors, system integrators, project developers, and installers/EPC companies. Canadian Solar Inc. sells its products primarily under its Canadian Solar brand name; and on an OEM basis. It has operations in North America, South America, Europe, South Africa, the Middle East, Australia, Asia, and internationally. The company was founded in 2001 and is headquartered in Guelph, Canada.
Historical performance
Stock information
Market capitalization: $1765346816
P/E ratio: 6.9765
PEG ratio: 0.29
Dividend yield: 0%
Company summary
Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon to photovoltaic product manufactures in the People's Republic of China. It offers ready-to-use polysilicon, and packaged to meet crucible stacking, pulling, and solidification products. The company was formerly known as Mega Stand International Limited and changed its name to Daqo New Energy Corp. in August 2009. Daqo New Energy Corp. was founded in 2006 and is based in Wanzhou, the People's Republic of China.
Historical performance
Stock information
Market capitalization: $1686932480
P/E ratio: 27.342
PEG ratio: 0.1738
Dividend yield: 0%
Company summary
Enphase Energy, Inc., together with its subsidiaries, designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. The company offers semiconductor-based microinverter, which converts energy at the individual solar module level, and combines with its proprietary networking and software technologies to provide energy monitoring and control services. It also offers AC battery storage systems; Envoy communications gateway; and Enlighten cloud-based monitoring service, as well as other accessories. The company sells its solutions to solar distributors; and directly to large installers, original equipment manufacturers, strategic partners, and homeowners, as well as directly to the homeowners and the do-it-yourself market through its legacy product upgrade program or online store. In addition, it offers online and in-person training resources for solar and storage installers, and Enphase system owners through its Enphase University. Enphase Energy, Inc. was founded in 2006 and is headquartered in Fremont, California.
Historical performance
Stock information
Market capitalization: $8746146816
P/E ratio: 54.8984
PEG ratio: 0.02
Dividend yield: 0%
Company summary
First Solar, Inc. provides photovoltaic (PV) solar energy solutions in the United States and internationally. It operates in two segments, Modules and Systems. The Modules segment designs, manufactures, and sells cadmium telluride solar modules that convert sunlight into electricity to integrators and operators of PV solar power systems. The Systems segment provides power plant solutions, such as project development; engineering, procurement, and construction; and operating and maintenance services to utilities, independent power producers, commercial and industrial companies, and other system owners. The company was formerly known as First Solar Holdings, Inc. and changed its name to First Solar, Inc. in 2006. First Solar, Inc. was founded in 1999 and is headquartered in Tempe, Arizona.
Historical performance
Stock information
Market capitalization: $6495838208
P/E ratio: 66.6882
PEG ratio: 0.75
Dividend yield: 0%
Company summary
JinkoSolar Holding Co., Ltd., together with its subsidiaries, engages in the design, development, production, and marketing of photovoltaic products. The company offers solar modules, silicon wafers, solar cells, recovered silicon materials, and silicon ingots. It also provides solar system integration services; and develops commercial solar power projects. The company sells its products to distributors, project developers, and system integrators; and utility, commercial, and residential customers under the JinkoSolar brand, as well as on an original equipment manufacturer basis. As of December 31, 2019, it had an integrated annual capacity of 15.0 gigawatt (GW) for silicon wafers, including 11.5 GW for mono wafers; 10.6 GW for solar cells; and 16.0 GW for solar modules. The company has operations in the People's Republic of China, the United States, Japan, Germany, the United Kingdom, Chile, South Africa, India, Mexico, Brazil, the United Arab Emirates, Italy, Spain, France, Belgium, and internationally. JinkoSolar Holding Co., Ltd. was founded in 2006 and is based in Shangrao, the People's Republic of China.
Historical performance
Stock information
Market capitalization: $1458535168
P/E ratio: 10.8177
PEG ratio: 0.2568
Dividend yield: 0%
Company summary
NextEra Energy Partners, LP acquires, owns, and manages contracted clean energy projects in the United States. It owns a portfolio of contracted renewable generation assets consisting of wind and solar projects, as well as contracted natural gas pipeline assets. The company was founded in 2014 and is headquartered in Juno Beach, Florida.
Historical performance
Stock information
Market capitalization: $3746315776
PEG ratio: 3.7543
Dividend yield: 0.0411%
Company summary
SolarEdge Technologies, Inc., together with its subsidiaries, designs, develops, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations worldwide. Its SolarEdge system consists of power optimizers, inverters, communication and smart energy management solutions, and a cloud based monitoring platform. The company's products are used in a range of solar market segments, such as residential, commercial, and small utility-scale solar installations. It also provides pre-sales support, ongoing trainings, and technical support and after installation services; and lithium-ion cells, batteries, and energy storage solutions for various industries, including energy storage systems, residential and commercial solar systems, uninterruptible power supplies, electric vehicles, aerospace, marine, and others. The company sells its products to the providers of solar PV systems; and solar installers and distributors, electrical equipment wholesalers, and PV module manufacturers, as well as engineering, procurement, and construction firms. SolarEdge Technologies, Inc. was founded in 2006 and is headquartered in Herzliya, Israel.
There’s only one exchange-traded fund solely focused on the solar energy category: the Invesco Solar ETF (TAN).
Outside this, you can invest in renewable energy ETFs that contain solar stocks, but be aware that these ETFs also track a number of other companies in the renewable energy category, including wind and hydroelectric energy.
ALPS Clean Energy ETF (ACES)
First Trust ISE Global Wind Energy Index Fund (FAN)
First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID)
Global X YieldCo & Renewable Energy Income ETF (YLCO)
Invesco Cleantech ETF (PZD)
Invesco Global Clean Energy ETF (PBD)
Invesco Solar ETF (TAN)
iShares Global Clean Energy ETF (ICLN)
SPDR S&P Kensho Clean Power ETF (CNRG)
Compare trading platforms
To invest in solar energy, you’ll need a brokerage account. Review your options below.
Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
Bottom line
Solar energy offers investors a socially conscious investment opportunity with long-term growth potential. But until the technology becomes more widespread, the high cost to consumers may impede profitability.
Shannon Terrell is a writer for Finder who studied communications and English literature at the University of Toronto. On any given day, you can find her researching everything from equine financing and business loans to student debt refinancing and how to start a trust. She loves hot coffee, the smell of fresh books and discovering new ways to save her pennies.
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