In this piece, we will take a look at the 13 best solar energy stocks to invest in heading into 2024. If you want to skip our introduction to the solar energy sector, then take a look at 5 Best Solar Energy Stocks To Invest In Heading Into 2024.
The 2022 disruption in global energy markets also dealt a shock to the world's plans to shift towards renewable energy and reduce carbon emissions. Before the crude oil price shock that sent inflation soaring all over the world, coal power plants were being outsourced and investments in new oil production facilities were considered skeptically. As prices rose, arguments that claimed that the only way to ensure stability in oil prices is to invest in more oil production capacity gained more weight.
This trend was particularly strong in America, which has risen to produce more oil than Saudi Arabia. American oil production stood at 11.9 million barrels per day in 2022, and forecasts from the Energy Information Administration (EIA) show that 2023 could see production sit at 12.8 million barrels per day to set a new all-time record.
However, another key reason behind the slowing interest in renewable energy in 2022 was a tight investment environment that was constrained as investors adjusted their perceptions about the Federal Reserve's funds rate amidst the record inflation we mentioned above. 2023 is quite different since while inflationary concerns are still present, the situation is not as drastic as it was last year. At the same time, the U.S. economy continues to tick along, raising hopes of a soft landing to end worries about a potential recession once and for all.
The shift in the broader investment climate is boding well for solar energy and the broader renewable energy sector. According to data from BloombergNEF, global renewable energy investment has already set a new record in 2023 in the form of record inflows for the first half of the calendar year. The details reveal that in the six months that ended in June 2023, global renewable energy investment stood at a whopping $358 billion to mark a strong 22% annual growth. This growth came on the back of growing venture capital financing for renewable energy companies, as capital commitments stood at $10.4 billion to outpace the broader investment growth because of the 25% annual increase.
This unmistakable investor optimism was fueled by investments in the global solar energy sector since solar investments not only continued to account for the largest percentage share of the total renewable energy investment pie but also pulled the overall growth figure upwards. This is because the $239 billion in investments in large and small scale solar systems were not only two thirds of the total renewable energy investments, but their stunning growth rate of 43% was nearly twice as the overall sectors. Regionally, both solar and overall renewable energy investments were the greatest in China, with the U.S. coming in second place. China is also the world's largest coal producer according to our coverage of 20 Countries That Produce the Most Coal, so there is plenty of potential in the Asian economic giant's power generation and usage infrastructure to wean off of sooty coal to environmentally friendly and sustainable solar energy generation.
At this point, you might be wondering how well solar stocks were performing as solar projects were receiving financing hand over fist. Well, one way to analyze this is to take a look at the share prices of solar energy stocks that hedge funds had invested in Q1 2023. This period marked the transition from a dour investment environment to a brighter one, and the top five solar energy and battery stocks that hedge funds had invested in during Q1 2023 were Tesla, Inc. (NASDAQ:TSLA), Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG), Albemarle Corporation (NYSE:ALB), and First Solar, Inc. (NASDAQ:FSLR). Their share price performance year to date as of early October 2023 is +139.47%, -50.82%, -57.73%, -20.37%, and 2.36%. Within these firms, Albemarle is a backend solar company, since while it does not manufacture solar panels itself, the firm still produces lithium and other materials that are used to make batteries.
The weakness in the top five hedge fund solar energy and battery stocks is also reflected in the MAC Global Solar Energy Stock Index. This index is the benchmark index for the Invesco Solar ETF (NYSE:TAN), a $1.47 billion exchange traded fund that has invested in major pure play solar company stocks. The index is down by 31.99% year to date while its corresponding ETF is down by 32.10%. However, a closer look at the solar stock ETF's multi and single year periods shows that investing in solar stocks might be a better play for the long term. This is because the Invesco Solar ETF (NYSE:TAN)'s average annualized five year return sits at 21.95% while it delivered strong annual total returns of 127.9%, 54.5%, and 66.5% during 2013, 2017, and 2019, respectively. In fact, the ETF also posted smashing returns in 2020 only to turn red for the next two years.
So, solar investments are rising but the stocks are dropping. Keeping this in mind, we decided to take a look at the best solar energy stocks heading into 2024, and in this list, the top three stocks are Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and First Solar, Inc. (NASDAQ:FSLR).
13 Best Solar Energy Stocks To Invest In Heading Into 2024
Solar panel workers installing a new farm for clean energy generation. Editorial photo for a financial news article. 8k. --ar 16:9
Our Methodology
To compile our list of the best solar energy stocks to invest in, we used the top 20 stock picks of the Invesco Solar ETF (NYSE:TAN) ETF that are traded on American stock exchanges and ranked them by the number of hedge funds that had bought the shares as of June 2023 using data from Insider Monkey's database of 910 hedge funds. Out of these, the 13 stocks with the greatest number of hedge funds were selected as the best solar energy stocks to invest in.
Best Solar Energy Stocks To Invest In Heading Into 2024
SunPower Corporation (NASDAQ:SPWR) is an American solar company that sells household solar power devices in the U.S. and in Canada. The firm's shares have seen some positive action during October as they gained 10% between October 10th and October 13th.
As of June 2023, 17 out of the 910 hedge funds part of Insider Monkey's database had held a stake in SunPower Corporation (NASDAQ:SPWR). Out of these, the firm's largest shareholder is Israel Englander's Millennium Management since it owns 2.4 million shares that are worth $23.6 million.
Along with SolarEdge Technologies, Inc. (NASDAQ:SEDG), Enphase Energy, Inc. (NASDAQ:ENPH), and First Solar, Inc. (NASDAQ:FSLR), SunPower Corporation (NASDAQ:SPWR) is a top solar stock to invest in.
Atlantica Sustainable Infrastructure plc (NASDAQ:AY) is a global British energy company with a renewable energy division. Nearly half of the firm's shares are owned by institutional investors, which lends credibility to its prospects but also opens the risk of large price movement.
During Q2 2023, 18 out of the 910 hedge funds polled by Insider Monkey had held a stake in the company. Atlantica Sustainable Infrastructure plc (NASDAQ:AY)'s biggest hedge fund investor is Israel Englander's Millennium Management due to its $41.3 MILLION stake.
Altus Power, Inc. (NYSE:AMPS) is a small utility company that operates solar power generation systems used by both private and industrial users. The firm won praise from investment bank Morgan Stanley in August when the bank explained that Altus Power, Inc. (NYSE:AMPS)'s potential to target the community solar power generation sector is not reflected in its share price.
By the end of this year's second quarter, 19 hedge funds out of the 910 part of Insider Monkey's research were Altus Power, Inc. (NYSE:AMPS)'s investors.
Sunnova Energy International Inc. (NYSE:NOVA) is an American company with more than a thousand megawatts of solar power generation capacity in its portfolio. The firm's investors were in for some bad news in October as Truist downgraded the shares to Hold from Buy and cut the price target by more than half to $11 from an earlier $35.
During 2023's June quarter, 19 out of the 910 hedge funds surveyed by Insider Monkey had bought a stake in the company. Out of these, Ken Griffin's Citadel Investment Group holds the biggest stake in Sunnova Energy International Inc. (NYSE:NOVA), which is worth $27.2 million.
Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) is a Singaporean pure play solar power hardware firm that makes and sells solar panels. The firm has beaten analyst EPS estimates in three out of its four latest quarters, and the stock is rated Buy on average.
After digging through 910 hedge fund holdings for their Q2 2023 investments, Insider Monkey discovered that 20 had invested in Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN). Ben Levine, Andrew Manuel, and Stefan Renold's LMR Partners is the largest shareholder among these since it owns $52.4 million worth of shares.
Daqo New Energy Corp. (NYSE:DQ) is a Chinese semiconductor manufacturer that provides products to solar panel manufacturers. The firm has seen a slowing Chinese economy significantly impact its earnings, as it has missed analyst EPS estimates in all four of its latest quarters.
During this year's second quarter, 22 out of the 910 hedge funds polled by Insider Monkey had bought and owned the firm's shares. Daqo New Energy Corp. (NYSE:DQ)'s biggest hedge fund investor is Lei Zhang's Hillhouse Capital Management due to its $80.8 million stake that comes via 2 million shares.
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is a solar hardware company that sells products used to charge batteries and monitor solar power generation systems. Goldman Sachs set a $28 price target and a Buy rating for the shares in October 2023, citing strong fundamentals for the American solar power utility sector.
As of June 2023, 24 out of the 910 hedge funds part of Insider Monkey's research had held a stake in Shoals Technologies Group, Inc. (NASDAQ:SHLS). Todd J. Kantor's Encompass Capital Advisors is the largest shareholder among these due to its $104.9 million investment.
Sunrun Inc. (NASDAQ:RUN) is a solar power hardware firm that sells solar panels and energy storage systems. Research and investment firm Truist sounded the warning bells for its shares in October, outlining that the tough interest rate environment could see Sunrun Inc. (NASDAQ:RUN) struggle to generate cash in the future. As a result, Truist cut the company's share price target to $12 from $30 and the rating to Hold from Buy.
24 out of the 910 hedge funds surveyed by Insider Monkey for their Q2 2023 investments were Sunrun Inc. (NASDAQ:RUN)'s investors. Out of these, William B. Gray's Orbis Investment Management owns the biggest stake which is worth $249 million.
Enphase Energy, Inc. (NASDAQ:ENPH), Sunrun Inc. (NASDAQ:RUN), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and First Solar, Inc. (NASDAQ:FSLR) are some top hedge fund solar energy stock picks.
