3 Solar Stocks To Buy On Trump Tariff

Shares of U.S. solar energy stocks climbed on Tuesday after President Donald Trump approved a new tariff on imported solar cells and modules.

U.S. Trade Representative Robert Lighthizer announced on Monday that Trump approved their recommendations for a tariff imposed on solar technology imports. The move comes after months of speculation regarding the possible solar tariff as Trump looks to combat what he and others view as unfair pricing from foreign solar producers, especially in China.

The USTR will impose a new 30% tariff on solar panel components, with the rates declining incrementally to 15% by the fourth year. The first 2.5 gigawatts of imported solar cells are exempt from these tariffs during the agreement.

“These cases were filed by American businesses and thoroughly litigated at the International Trade Commission over a period of several months,” Lighthizer said in a statement. “The ITC found that U.S. producers had been seriously injured by imports and made several recommendations to the President.”

The full outline of the planned tariff, which also includes imported large residential washing machines, specifically points to China’s 2017 proclamations that it hopes to increase its current solar production capacity to about 70% of the global total.

Following the announcement, investors began to search for U.S. solar stocks that stand to gain in the wake of Trump’s new tariff.

Aside from electric car power Tesla (NASDAQ:TSLA) , which could see gains from this tariff as it increases domestic manufacturing for its solar panel business, three U.S. solar energy companies might also experience gains.

First Solar, Inc. (NASDAQ:FSLR)

One of the companies that could benefit the most is First Solar, which is also currently a Zacks Rank #2 (Buy). The Tempe, Arizona-based firm manufactures some of its solar panels in the U.S. On top that, First Solar’s thin-film panels could possibly be exempt from the new tariffs.

Before today’s gains, First Solar has seen its stock price skyrocket nearly 105% in the last 52 weeks and 14.12% over the last 12. This climb can be attributed in part to investors’ belief that this long-talked about Trump solar tariff would greatly benefit the large American maker.

Sunrun Inc. (NASDAQ:RUN)

Another domestic firm that might benefit is Sunrun. The company is one of the biggest dedicated residential solar companies in the U.S. and is also currently a Zacks Rank #1 (Strong Buy). Shares of the firm, which seeks to provide “solar as a service” and offers its consumers the chance personalize their solar system, surged over 6% on Tuesday.

The company currently boasts 130,000 residential U.S. solar customers in 21 states. Although Sunrun’s CEO came out against President Trump’s tariffs, claiming it would harm U.S. solar energy jobs, the stock popped because the new policy was not as devastating to installers as was once anticipated. It is also possible that installers will benefit from more competitive pricing among suppliers.

SolarEdge Technologies (NASDAQ:SEDG)

Fremont, California-headquartered SolarEdge is another domestic solar energy company that could experience a boost from the new tariff. SolarEdge is currently a Zacks Rank #3 (Hold).

Shares of SolarEdge surged well over 4% to inch closer to their 52-week high on Tuesday. Before today’s push, the company had seen its stock price climb 161% over the last year. The company, which is a global leader in PV inverters, power optimizers, and module-level monitoring services, is expected to see its sales skyrocket by 61.23% in Q4.

Looking even farther ahead, SolarEdge is expected to expand its EPS figures at an annualized rate of 24% over the next three to five years. If Trump’s tariff leads to greater domestic solar panel production and use, SolarEdge’s monitoring services and power optimizer businesses could skyrocket.

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