The world is facing calamities and global warming is one of them. The increasing population always demands more energy needs. The scarcity of conventional sources of energy and increasing pollution has alarmed everyone. On the subject of that, the energy companies are transforming into sustainable sources for power generation. Hence, solar energy stocks are getting popular day by day.
Solar power is one of the leading segments in the energy sector. Solar power is set to play an increasingly important role in meeting global energy needs in the coming decades. According to the U.S. Energy Information Administration, the share of renewable sources in the country’s power generation sector could double, expected from 21% to 42%, by 2050.
As per Wood Mackenzie Power & Renewables, it took forty long years to reach 1 million solar installations in the U.S. Whereas, the next 1 million took only three years. By 2021 alone, it’s expected to reach 3 million installations.
There’s a massive opportunity for investors in the solar power sector. We bring you the top five solar energy stocks to buy in 2021.
Canadian Solar (CSIQ)
The first top solar energy stock to buy in 2021 on our list is Canadian Solar (CSIQ).
Canadian Solar (CSIQ)stock looks promising in the solar energy sector. The company manufactures solar ingots, cells, wafers, modules, and other solar power products. Canadian Solar is involved in the development and sales of various solar projects.
Canadian Solar has its market share spread across the globe. Most of the revenue comes from Asia, approximately around 47%. While 35% comes from America, and the remaining 18% is from Europe and other countries.
Canadian Solar is expanding its business considering the demand in the market. The company has eyes on the project development pipelines in Africa, Europe, and the Middle East. Recently, Canadian Solar acquired a $59.7 million facility to support growth in the global energy business.
The revenues have improved consistently for Canadian Solar over the past years. Recently, the company announced its second-quarter results of 2021. The revenue had a staggering pump over 105% from the same period last year.
For the third quarter, the company expects to generate a gross margin between 14% to 16%. The prime target is revenue growth and, with time, the company will expand its margin.
Another plus point for Canadian Solar, where it will thrive, is the battery power. Canadian Solar has 3 megawatt-hours of battery storage in operation. A few other projects in battery power are also in progress including, a 1.5 gigawatt-hours of storage with 0.8-gigawatt hours in its late-stage pipeline.
SolarEdge Technologies (SEDG).
The second solar energy stock is SolarEdge Technologies (SEDG).
SolarEdge Technologies (SEDG)is known for its solar inverters. Solar inverters are a key component of the microgrid that is used in homes, schools, businesses, campuses, and beyond. Bringing up the SolarEdge stock, the shares of SEDG have dropped over the past two years. SolarEdge shares soared up to $365 in December last year, hitting an all-time high. However, since then, the shares declined to lows of $200 before rebounding to current levels.
In the first quarter of 2021, the company reported a 13% increase in its revenue to $405.5 million from the prior quarter. While the solar products revenue jumped by 15% to $376.4 million. For the second quarter, SolarEdge expects general revenues between $445 million to $465 million. While the revenues of the solar product are expected between $405 million to $420 million.
Things will improve with time for SolarEdge. In 2021, the results are already improving and the company expects to end the year on a high.
SolarEdge’s 40% sales come from the United States. The solar market is improving in the country and will see a rise in the coming years. This puts SolarEdge in a sound position to make a good setup for sales and earnings growth.
The consensus estimates for SolarEdge for the adjusted fiscal 2021 earnings are $5.09 per share. If the company reaches this target, it will make a solid 24% improvement from 2020.
Enphase Energy (ENPH)
The third solar stock to buy in 2021 on our list is Enphase Energy (ENPH).
Enphase Energy (ENPH)is a leading brand in microinverters. The company focuses on home energy solutions and supplies semiconductor-based microinverters. These microinverters convert the direct current generated by solar panels into alternating current.
The company has been generating remarkable revenue and gross margins. In the latest quarterly results, Enphase reported a whopping 152% rise in its revenue over the prior-year quarter. The second-quarter gross margin stood at 40.4%.
The microinverter company expects its gross margin to range from 37% to 40% in the third quarter of 2021. Good thing about Enphase is that it’s restricting its expenses. The operating expenses for the second quarter were less than 15% of sales.
Enphase’s products have attained command in North America, and now the company is expanding into Europe and Australia. Just like most of the other solar stocks, Enphase has been on an upward trend since the beginning of 2021. All in all, the company looks well-placed to continue growing in the years to come.
Brookfield Renewable (BEP)
The fourth stock on our list of top solar energy stocks to buy in 2021 is Brookfield Renewable (BEP).
We know Brookfield Renewable for its hydropower and wind power. However, the clean energy company believes that within the next decade, solar could make up most its production capacity. Brookfield is currently operating in North America and Europe.
Brookfield sees much potential in solar energy and that’s why they’re focusing on it. The company is investing heavily in solar energy. Brookfield recently collaborated with Exelon to acquire a massive stream of solar power across 600 solar sites in the U.S.
The company will continue with hydropower and wind power. But it’s also planning for the future. One reason to invest in solar energy is the declining costs. Therefore, diverse income streams are good for Brookfield and that in renewable energy.
What makes Brookfield an attractive solar stock? Well, first, it’s expanding its solar power segment and is on track to increase its per share at an 11% to 16% annual rate through 2025. Second, Brookfield offers dividends. The increasing share in the solar market would support 5% to 9% yearly increases in its high-yielding dividend. Brookfield currently has a dividend yield of 3%.
The final solar energy stock that makes our list is CleanSpark (CLSK).
We are living in the world of digital technology surrounded by software. CleanSpark is the one company in the solar power sector that provides software solutions. The company offers end-to-end microgrid modeling, communications, and energy management.
There is huge potential for CleanSpark in the long term. Once the solar power sector makes green growth, CleanSpark will play a massive role for hardware-based solar firms. CleanSpark is a small company and at this point, you can’t be too bullish. However, it looks promising.
In its recently reported fiscal third quarter, CleanSpark reported a notable 176% increase in revenues over the nine months. The company is unprofitable in the books. However, analysts expect CleanSpark to report a $0.41 adjusted profit this fiscal year, from a $2.44 loss in fiscal 2020.
CleanSpark is highly into the Bitcoin mining business. Back in April this year, the company announced a material expansion of its Bitcoin mining operations. Bitcoin mining has been criticized for using too much power. But we’ve already seen miners switching to renewable sources.
Whereas, CleanSpark notes that 95% of the power for its mining operations is carbon-free. Therefore, CleanSpark would be influential in the crypto mining market as well.