Top Solar Stocks to Watch in Q3 2023: Prices and Growth Insights

Daqo New Energy (DQ), Canadian Solar (CSIQ), and First Solar (FSLR) lead the solar sector in value, growth, and momentum respectively in Q3 2023.

Despite the global push towards renewable energy and attractive government incentives, solar stocks have faced challenges over the past year, including supply chain disruptions, rising interest rates, and policy uncertainties.

The Invesco Solar ETF (TAN), the largest solar-focused ETF by assets under management, declined by 34.1% over the last 12 months, while the Russell 1000 Index gained approximately 10.5% in the same period.

Below is an analysis of the top three solar stocks excelling in value, growth, and momentum as of late August 2023.

Best Value Solar Stocks

These stocks exhibit the lowest trailing 12-month price-to-earnings (P/E) ratios, indicating potential undervaluation relative to earnings. This metric helps investors assess how much they pay for each dollar earned, comparing solar companies against sector peers and broader markets.

• Daqo New Energy Corp. (DQ): A Chinese manufacturer specializing in ultra-pure polysilicon crucial for solar cells, modules, ingots, and wafers. Recently, CEO Longgen Zhang stepped down, with Vice Chairman Xiang Xu appointed as successor.
• JinkoSolar Holding Co. (CSIQ): Renowned for producing high-quality photovoltaic products, including solar modules and silicon wafers. Its clientele spans solar developers, EPC firms, and residential customers. In Q2 2023, module shipments surged 36.2% sequentially and 74.4% year-over-year.
• Canadian Solar Inc. (CSIQ): Known for innovative photovoltaic technology and project development, serving utilities, commercial, industrial, and residential sectors. Recently announced delivery of energy-storage products for an Arizona project via subsidiary Recurrent Energy.

Fastest-Growing Solar Stocks

Ranked by a growth model combining quarterly year-over-year revenue and EPS growth, these companies demonstrate strong financial momentum.

• Canadian Solar (CSIQ): Refer to description above.
• SolarEdge Technologies Inc. (SEDG): Global provider of solar ingots, wafers, cells, and battery storage products. Its DC optimized inverter systems enhance solar installation efficiency. Recently launched Home Hub and Wave inverters integrating power control to lower installation costs.
• Hannon Armstrong Sustainable Infrastructure Capital Inc. (HASI): Offers capital and services to U.S. energy efficiency and renewable energy projects. In May 2023, announced a $300 million public stock offering for corporate purposes.

Solar Stocks with the Strongest Momentum

These stocks delivered the highest total returns over the past year, often favored by momentum investors anticipating continued outperformance.

• First Solar Inc. (FSLR): Manufactures cadmium telluride photovoltaic modules, serving developers, utilities, and commercial clients worldwide. Recently announced plans for a fifth U.S. manufacturing facility in Louisiana.
• Array Technologies Inc. (ARRY): Specializes in solar tracking systems that optimize panel orientation for utility-scale projects. Its STI segment, acquired recently, grew 124% year-over-year, boosting overall revenue by 21%.
• Shoals Technologies Group Inc. (SHLS): Produces electrical balance of systems components like combiner boxes and wiring harnesses, enhancing solar installation efficiency and safety. Launched Snapshot I-V health monitoring products integrated into solar asset management systems.

Why Invest in Solar Stocks?

Rising Renewable Energy Demand: With increasing global focus on sustainability and climate change mitigation, solar energy demand is projected to grow substantially. Vantage Market Research forecasts the global solar panel market to reach $264 billion by 2030, growing at an 8.2% CAGR between 2023 and 2030.

Technological Progress and Cost Reductions: Advances in solar panel efficiency, energy storage, and grid integration, combined with significant cost declines, enhance the sector’s profitability. The U.S. Department of Energy aims to reduce solar energy costs by 60% within eight years, investing $128 million to accelerate innovation.

Investment Risks in Solar Stocks

Policy Dependence: Solar companies are sensitive to changes in government incentives, subsidies, and regulations. Shifts in political priorities can impact project economics and stock valuations.

Technological and Infrastructure Challenges: Despite improvements, solar panel efficiency remains lower than some traditional energy sources, affecting competitiveness. Additionally, extensive infrastructure investments in storage and distribution are required, which may slow growth in certain regions.

Disclaimer: The information provided is for educational purposes only and does not constitute investment advice. The author does not hold positions in the mentioned stocks as of the article's publication.

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