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Solar Stocks Rally After Presidential Debate: Should Investors Chase?
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Solar stocks have seen quite a rebound this week following Tuesday’s presidential debate in which democratic nominee Kamala Harris emphasized building out alternative energy assets.
Despite attractive stocks such as First Solar (FSLR - Free Report) , Sunrun (RUN - Free Report) , and Array Technologies (ARRY - Free Report) , the Zacks Solar Industry is in the bottom 43% of over 250 Zacks industries.
With the production and usage of solar energy still somewhat in the beginning stages of its development, the industry has struggled amid a high inflationary environment although there are pockets of opportunities for investors.
FSLR Stock: The Industry Leader
First Solar has led the recent rally in solar stocks with FSLR spiking nearly +15% since Tuesday’s presidential debate as the largest solar module manufacturer. Seeing expansive growth, First Solar’s stock is now up +35% this year.
After such a sharp rally this year, First Solar’s stock lands a Zacks Rank #3 (Hold) but projections of high double-digit top and bottom line growth in fiscal 2024 and FY25 make the company a viable long-term investment.
Image Source: Zacks Investment Research
RUN Stock Sports a Zacks Rank #1 (Strong Buy)
As a provider of residential solar energy systems, it’s noteworthy that Sunrun is the top-rated stock among the Zacks Solar Industry. Sporting a Zacks Rank #1 (Strong Buy), earnings estimate revisions have trended higher over the last 60 days for FY24 and FY25 as Sunrun strives for profitability.
Image Source: Zacks Investment Research
Furthermore, Sunrun’s top line expansion alludes to its future earnings potential as total sales are now expected to dip -5% this year but projected to rebound and climb 20% in FY25 to $2.57 billion. Plus, FY25 sales projections would be a 100% increase from pre-pandemic levels with 2019 sales at $859 million.
Sunrun’s cash & equivalents have also skyrocketed from $363 million in 2019 to over $1 billion at the end of Q2 2024. Improving financial metrics have started to justify the premium being paid for Sunrun’s stock in regards to not being profitable and trading around $20.
Image Source: Zacks Investment Research
ARRY Stock may be Poised for a Sharp Rebound
Providing ground mounting systems used in solar energy projects, Array Technologies' stock may be poised for a sharp rebound considering the company is turning a profit and ARRY stock trades at just $6.
Array Technologies has fallen sharply from its 52-week high of $26 and trades at 9.6X forward earnings with EPS slated to drop -39% in FY24 but expected to rebound and soar 49% next year to $1.03 per share.
ARRY is up +2% in Friday’s trading session and currently has a Zacks Rank #3 (Hold) along with an “A” Zacks Style Scores grade for Value.
Image Source: Zacks Investment Research
The Zacks Solar Industry’s Performance
Year to date, the Zacks Solar market is still down -16% which has been very subpar to the S&P 500 and Nasdaq’s gains of over +15%. The solar market is down -4% this month to also underperform the broader indexes despite this week’s rally.
Image Source: Zacks Investment Research
Final Thoughts
Although investors may be hoping for an extended rebound among solar stocks, it's best to choose carefully when investing in these equities.
While First Solar, Sunrun, and Array Technologies are attractive among others, there is still a lot of downside risk in many solar stocks. Rate cuts will certainly help as inflation has taken a toll on their operating environment and development.
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Solar Stocks Rally After Presidential Debate: Should Investors Chase?
Solar stocks have seen quite a rebound this week following Tuesday’s presidential debate in which democratic nominee Kamala Harris emphasized building out alternative energy assets.
Despite attractive stocks such as First Solar (FSLR - Free Report) , Sunrun (RUN - Free Report) , and Array Technologies (ARRY - Free Report) , the Zacks Solar Industry is in the bottom 43% of over 250 Zacks industries.
With the production and usage of solar energy still somewhat in the beginning stages of its development, the industry has struggled amid a high inflationary environment although there are pockets of opportunities for investors.
FSLR Stock: The Industry Leader
First Solar has led the recent rally in solar stocks with FSLR spiking nearly +15% since Tuesday’s presidential debate as the largest solar module manufacturer. Seeing expansive growth, First Solar’s stock is now up +35% this year.
After such a sharp rally this year, First Solar’s stock lands a Zacks Rank #3 (Hold) but projections of high double-digit top and bottom line growth in fiscal 2024 and FY25 make the company a viable long-term investment.
Image Source: Zacks Investment Research
RUN Stock Sports a Zacks Rank #1 (Strong Buy)
As a provider of residential solar energy systems, it’s noteworthy that Sunrun is the top-rated stock among the Zacks Solar Industry. Sporting a Zacks Rank #1 (Strong Buy), earnings estimate revisions have trended higher over the last 60 days for FY24 and FY25 as Sunrun strives for profitability.
Image Source: Zacks Investment Research
Furthermore, Sunrun’s top line expansion alludes to its future earnings potential as total sales are now expected to dip -5% this year but projected to rebound and climb 20% in FY25 to $2.57 billion. Plus, FY25 sales projections would be a 100% increase from pre-pandemic levels with 2019 sales at $859 million.
Sunrun’s cash & equivalents have also skyrocketed from $363 million in 2019 to over $1 billion at the end of Q2 2024. Improving financial metrics have started to justify the premium being paid for Sunrun’s stock in regards to not being profitable and trading around $20.
Image Source: Zacks Investment Research
ARRY Stock may be Poised for a Sharp Rebound
Providing ground mounting systems used in solar energy projects, Array Technologies' stock may be poised for a sharp rebound considering the company is turning a profit and ARRY stock trades at just $6.
Array Technologies has fallen sharply from its 52-week high of $26 and trades at 9.6X forward earnings with EPS slated to drop -39% in FY24 but expected to rebound and soar 49% next year to $1.03 per share.
ARRY is up +2% in Friday’s trading session and currently has a Zacks Rank #3 (Hold) along with an “A” Zacks Style Scores grade for Value.
Image Source: Zacks Investment Research
The Zacks Solar Industry’s Performance
Year to date, the Zacks Solar market is still down -16% which has been very subpar to the S&P 500 and Nasdaq’s gains of over +15%. The solar market is down -4% this month to also underperform the broader indexes despite this week’s rally.
Image Source: Zacks Investment Research
Final Thoughts
Although investors may be hoping for an extended rebound among solar stocks, it's best to choose carefully when investing in these equities.
While First Solar, Sunrun, and Array Technologies are attractive among others, there is still a lot of downside risk in many solar stocks. Rate cuts will certainly help as inflation has taken a toll on their operating environment and development.