The pressure to become more environmentally responsible is a clear mandate for companies and investors to change the way that they operate, and this makes solar energy companies ideal stock picks for 2022 portfolios. The political consensus has swung towards solar power being seen as a fundamental part of future energy production, and according to the International Energy Agency, 60% of global renewable energy is attributed to solar. As growth continues, it is estimated that by 2026, the global solar industry is projected to be worth $223.3bn.
Recent political tensions between Ukraine and Russia and skyrocketing oil and gas prices mean that the shift to solar is as much about being able to keep the lights on as it is saving the planet. The alignment of long-running eco campaigns and short-term political realities makes now the time to locate and invest in the best solar energy stocks.
Rule number one of successful investing is to identify a trend and trade with it, which is why the below list of top solar energy stocks for 2022 includes some of the most sought-after stocks in the market.
Top Solar Energy Stocks 2022
- First Solar, Inc. (FSLR)
- SunPower Corp (SPWR)
- Array Technologies, Inc. (ARRY)
- Sunnova Energy International Inc. (NOVA)
- Shoals Technologies Group, Inc. (SHLS)
The Solar Energy Stocks Sector
The solar energy stocks sector has been building momentum for decades. More importantly, the technology behind extracting power from the sun and turning it into electricity has become more efficient. The net result is that the industry is now at a tipping point, which investors need to be aware of.
In 1995, thin film, crystalline silicon and concentrator methods of photovoltaic (PV) energy production had respective efficiency rates of approximately 5%, 11% and 14%. By 2020, the numbers for each group had risen to 12%, 16% and 25%.
Over the same time period, the capital cost for each of the PV systems dropped. From 1995 to 2000, the US dollar cost per watt of electricity dropped from approximately $7.5 to $1 for thin film and concentrator methods and $6.5 to $2 for crystalline silicon.
Using fundamental analysis can help identify how these trends will feed through into growth prospects of the different firms, and technical analysis can help identify the best time to step in and buy them. Two other questions for long-term investors to consider are the extent to which government subsidies are supporting the sector, and whether that support might be scaled back at some point – and which of the firms looks best positioned to become the dominant market leader as the industry matures.
1. First Solar, Inc. (FSLR)
First Solar, Inc. is one of the most well-established firms in the solar energy sector. The firm was established in 1990 and through its history has embarked on aggressive expansion plans, which have resulted in it having operations across the globe.
It is well positioned to use its scale to tap into increased interest in solar, and the multi-year deal with BP subsidiary Lightsource BP to provide up to 5.4 gigawatts of solar modules highlights how the firm is operating at the top end of the industry.
Recent cost-cutting exercises have significantly improved the firm’s balance sheet and resulted in the firm sitting on extensive cash reserves that could be used to fuel further expansion or returned to investors in the form …….