Whenever the talk is about electricity and energy efficiency, solar power usually comes up as a viable alternative to fossil fuels. But solar energy has been slow to adopt by many due to its high price and lack of understanding. The United States government has tried to step in with rebates and tax credits to help jumpstart the solar industry to no avail. Regardless of this, there are solar stocks worth investing your money in.
You might be wondering why this is so, given the information I just presented. The reason is that we are on the cusp of a shift in the industry. Thanks to rapid technological advances, solar energy is quickly becoming cheaper and more efficient. It is just a matter of time until more and more people jump on the wagon and start taking advantage of solar energy.
With a handful of solar stocks out there, I narrowed the list down to 3 that I feel have a solid future and can make you some money both in the short and long term. Just understand that since this market is still developing, there will be a large degree of volatility. But with estimates that the solar industry could be worth trillions of dollars, the sky is the limit for these solar stocks.
3 Solar Stocks With A Bright Future
1. SunPower Corporation
SunPower (NASDAQ:SPWR) is the most efficient maker of solar panels out there. Their problem? The cost of their panels are higher than the competition, and with more and more lower priced panels coming from China, the price gap is only widening.
The solution then for SunPower is to reduce costs. And that is exactly what they are working on. They invested heavily in new technology with the goal of driving down production costs. As a result of this investment, earnings took a hit in 2016.
The dust still hasn’t settled on this yet with recent earnings per share coming in at a loss of $0.35. However they did beat estimates by $0.09. Revenues came in at $341 million, down 15% from the previous year. But again, they beat guidance by $29 million.
As the dust completely settles, SunPower should be set up nicely for the future. Add in the fact that they can be a complete solar solution for utility companies as well and now might be a perfect time to buy shares of this company.
2. First Solar Inc
The next of the solar stocks is First Solar (NASDAQ:FSLR). They have been in business for over 25 years, which came as news to me. I didn’t realize that solar energy was a thing back then. And think of the costs!
But First Solar is a turnkey solar solution for utilities. They provide complete solutions including installation and maintenance of their panels.
Just like with SunPower, First Solar is in the process of upgrading its manufacturing process. This is very costly with the new technology that is out there, but it should quickly pay off in the years to come.
In fact, First Solar raised full year guidance for 2017. In their most recent earnings release, earnings per share came in at $0.64, beating by $0.60. Revenues were down 38% at $623 million. However this beat estimates by $67 million.
Once First Solar is able to complete its upgrades, you should see earnings per share and revenues spike, and along with them the stock price.
3. JinkoSolar Holding Company Limited
I mentioned that one issue SunPower is facing is lower priced solar panels from China. Well, JinkoSolar (NYSE:JKS) is one of those Chinese solar panel companies. They have a ton of capacity to build panels, but build too many and inventory problems can arise. Luckily this hasn’t been the case with JinkoSolar.
Of course, when you offer the lowest price product, you sacrifice on something, and with solar panels this sacrifice is efficiency. But not everyone is willing to pay a high price for the most efficient panel. Some people just want to take advantage of solar energy. As a result, this solar stock has a bright future.
When it comes to earnings, earnings per share was a miss in the recent quarter, $0.28 which missed by $0.41. But revenues jumped 31% to $1.17 billion, beating estimates by $172 million.
Final Thoughts
So there are 3 solar stocks to consider investing in. As I noted above, the industry is still in its infancy compared to where it can go. As a result, there will be turbulence on any given day as these companies drastically miss or beat earnings and others consolidate into one.
If you are able to withstand the white knuckle ride, these solar stocks should return you a nice profit over the long term.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.