Solar stocks have experienced a significant resurgence post-Tuesday’s presidential debate, where democratic nominee Kamala Harris showcased a firm commitment towards expanding alternative energy resources. Despite prominent contenders like First Solar (FSLR), Sunrun (RUN), and Array Technologies (ARRY), the Zacks Solar Industry finds itself in the lower 43% bracket among over 250 Zacks industries.
The First Ray of Hope: FSLR Stock
Leading the charge in the solar stock rally is First Solar, with an impressive surge of nearly +15% since the debate. As the largest solar module manufacturer, First Solar has exhibited substantial growth, boasting a 35% increase in stock value this year. While currently holding a Zacks Rank #3 (Hold), analysts project a robust double-digit growth trajectory for fiscal years 2024 and 2025, making it an attractive long-term investment prospect.
Shining Bright: RUN Stock with a Zacks Rank #1
Sunrun, a prominent player in residential solar energy systems, stands out as the top-rated stock in the Zacks Solar Industry with a Zacks Rank #1 (Strong Buy). Earnings estimates for FY24 and FY25 have been on an upward trend, signaling the company’s push towards profitability.
Furthermore, Sunrun’s impressive top-line growth hints at its future earnings potential, with a projected 20% surge in FY25 sales to $2.57 billion – a 100% leap from pre-pandemic levels in 2019. With a substantial increase in cash & equivalents, now exceeding $1 billion, Sunrun’s strengthening financial position justifies its current premium.
ARRAY Stock Ready to Power Up
Specializing in ground mounting systems for solar energy projects, Array Technologies may be on the brink of a noteworthy recovery. The company, currently profitable, sees its stock trading at a modest $6 despite a significant decrease from its 52-week high. With a forward earnings multiple of 9.6X, expectations suggest a drop of -39% in EPS for FY24, followed by a robust 49% rebound in the subsequent year.
Assessing the Solar Industry Performance
Year to date, the Zacks Solar market reflects a decline of -16%, notably underperforming the S&P 500 and Nasdaq, which have seen gains exceeding +15%. Despite the recent rally, the solar market lags, down -4% for the month, illustrating its struggle to keep pace with broader market indexes.
Cautious Optimism Moving Forward
While the allure of a solar stock rebound is enticing, prudent decision-making is crucial in navigating the market dynamics. Although companies like First Solar, Sunrun, and Array Technologies stand out, inherent risks persist. Rate adjustments amidst lingering inflationary pressures will be instrumental in reshaping the industry’s landscape and growth trajectory.