The top solar stocks could be in for quite a bright future as they continue to supply various power producers with the equipment to meet the growing demand for sustainable energy.
Undoubtedly, the artificial intelligence (AI) revolution and the rise of electric vehicles (EVs) stand out as two notable tailwinds that could bring forth more demand for solar power. While there’s still more progress and innovation that needs to happen before solar cells can start reducing demand for fossil fuels, I do find the best-run solar panel plays to be well-positioned to help the world cut back on its emissions.
Indeed, new power-hungry AI data centers will continue to come online. To feed them, many firms (especially big tech) will need to embrace solar (and wind) to ensure they’re progressing on their sustainability targets.
Let’s check in with three solar stocks that could light up for investors over the long run.
First Solar (FLSR)
First Solar (NASDAQ:FLSR) has to be my top solar stock pick after ending the last trading session of the first half with a nearly 10% plunge. Indeed, the broader basket of renewable energy stocks was under pressure the day after the Trump-Biden presidential debate.
Given the generous subsidies his administration offered, solar companies would undoubtedly prefer if Joe Biden stayed in the Oval Office.
Depending on who you ask, Biden had a tough showing against Trump in their first faceoff of 2024. Some Democrats may be seriously concerned about Biden’s performance. Though Biden may have lost the debate, only time will tell who comes out on top come Election Day.
At this juncture, FSLR stock seems to be trading as though Trump has already won the election. Given that First Solar had been performing quite well prior to the slip, I view the dip as a great longer-term buying opportunity for solar investors.
Canadian Solar (CSIQ)
Canadian Solar (NASDAQ:CSIQ) is a deeper value option for investors after nosediving more than 42% in the first half. Like other solar plays, CSIQ stock was under pressure during Friday’s session, partly thanks to Biden’s poor performance in the debate.
With a market cap south of $1 billion and freshly cut full-year sales guidance, Canadian Solar may seem more like a value trap than a bargain, especially given that its solar modules may not be the best-in-class in terms of efficiency right now.
Despite not having the most sought-after solar panels, the firm offers an excellent value proposition. Its multi-crystalline silicon solar cells are no slouch, either, with an impressive 23.81% efficiency rating (a world record set in 2020).
I consider CSIQ stock an excellent value play while going for 6.6 times forward P/E.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) also took an uppercut to the chin on the last trading day of the first half, shedding 4%. With Trump’s victory seemingly priced in, there could be considerable upside should Biden and the Democrats pull off a comeback. Either way, much election risk has been removed after the first debate.
The real value of NEE stock lies in its impressive long-term narrative. The company expects annual earnings to grow 6-8% through 2027. Additionally, its sheer size ($145.5 billion market cap) could provide it with the means to scale up as it looks to transition the world to cleaner energy.
Though some notable analysts have downgraded NEE stock in recent weeks, I view the name as one of the best values in the renewable scene, even if it’s not the biggest beneficiary of an AI-induced surge in power demand. The stock trades at 19.35 times trailing P/E with a 2.79% dividend yield, making it a great balance of income and long-term growth.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.