President Joe Biden’s administration is actively promoting the adoption of solar energy among American households. In June, the White House announced $7 billion in grant money for residential solar programs across the country. This is in addition to the $300 billion in tax cuts for clean electricity projects, including solar, which were included in the administration’s infrastructure bill. Several states are also offering incentives to encourage the transition to solar energy.
These government incentives have created a favorable environment for investing in solar stocks. The solar market is experiencing significant growth as both commercial and residential customers embrace renewable energy. Allied Market Research predicts that the global solar energy market will reach $300 billion by 2032, up from $94.6 billion in 2022. This predicted growth is expected to drive up the value of solar stocks in the coming years.
One notable solar stock to consider is First Solar (NASDAQ: FSLR). The company is involved in the entire life cycle of solar panels, including manufacturing, maintenance, and recycling. It also provides financing services to residential and commercial clients. First Solar’s stock has performed well, with a 35% increase this year, 167% over the past 12 months, and 283% over the past five years. However, investors should be cautious about the company’s high valuation, with shares trading at over 500 times future earnings.
Another solar stock to watch is Sunrun (NASDAQ: RUN), a company specializing in batteries and energy storage systems for residential solar panel systems. Sunrun has seen a 9% decrease in its share price over the past 12 months but has shown recent positive momentum. Despite a relatively high valuation, Sunrun’s stock has been favored by analysts, with Morgan Stanley raising its price target and maintaining an “overweight” rating.
SunPower (NASDAQ: SPWR) is a solar company that manufactures batteries and energy storage technology for solar panels. With a longer history and more mature business model than Sunrun, SunPower has experienced a 32% drop in its share price over the past year but has gained 150% over the past five years. Compared to First Solar and Sunrun, SunPower has a more reasonable value, with shares trading at a price-earnings (P/E) ratio of 98.
Investing in solar stocks presents an opportunity to capitalize on the growth of the renewable energy market. However, it is important for investors to carefully evaluate the valuations and performance of each company before making investment decisions.