Driven by the high inflationary environment and high-interest rates, the renewable energy sector has seen a slump. Renewable energy, especially solar energy gained the limelight in 2022 and solar stocks hit new highs but they were also the hardest hit when the economy was suffering. However, the International Energy Agency states that wind and solar will generate more electricity than hydropower this year and solar power will surpass nuclear electricity generation in 2026.
As macroeconomic conditions improve, we could see a shift towards renewable sources of energy and this is when solar energy will gain prominence. The upcoming elections will also play a crucial role in the transition towards renewable sources of energy. Smart investors know that now is an ideal time to load up on solar stocks that show high upside potential. With that in mind, let’s take a look at the top solar stocks to own this month.
First Solar (FSLR)
One of the best solar stocks to own, First Solar(NASDAQ:FSLR) was on fire after the recent results announcement. The solar panel manufacturer develops Cadmium Telluride PV modules which offer high efficiency at a low cost.
Exchanging hands for $154, the stock is down 10% year-to-date and has been on a downward spree over the past few months. However, the company is highly resilient and has impressed investors with strong financials.
In the fourth-quarter results, the company reported net sales of $1.2 billion and $3.3 billion for 2023. It reported a net income of $3.25 per share and had better-than-expected guidance for 2024.
The management expects EPS in the range of $13 to $14 for the year with a net annual sales between $4.4 billion to $4.6 billion. The company has committed $1.1 billion for a new manufacturing unit in the United States, which is also its fifth U.S. panel facility.
The one big reason to bet on this stock is the tax credits. It expects to receive tax credits in the range of $1 billion and $1.05 billion which will help with operations. The recent dip in the stock is due to the high-interest environment and a slowdown in demand. However, the future is solar energy and FSLR looks hot.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) hit new highs during the solar energy boom but has dropped since then. The solar equipment company saw the stock hit $336 in December 2022 but has come down to $111 today. It has dropped 42% in the year and I think this dip is a good chance to buy.
One thing to keep in mind is that Enphase is not the only one suffering. The overall demand for solar power equipment is down and all solar energy companies are going through a slump.
For investors, this is a time to grab the stocks. In the recent quarter, the company’s revenue stood at $303 million and the EPS came in at 54 cents. While the numbers are below expectations, the management stated that it expects volatility this year.
The company has to clear the inventory and it expects a demand recovery later this year in Europe. It also offers services of distribution and energy monitoring and analysts are expecting the EPS to soar as high as 78 cents in the quarter.
If the company manages to achieve revenue growth, it will start moving upwards. With rapid growth expected for the future, buying Enphase right now can be a smart move.
Brookfield Renewable (BEPC)
Brookfield Renewable (NYSE:BEPC) is a diversified renewable energy business with a strong presence in the solar energy sector. Its portfolio consists of hydroelectric, wind, solar and distributed energy. The company has a presence across multiple countries and has impressed investors with solid dividends.
It has a strong balance sheet which allows investment in acquisitions and growth projects. It is no longer a pure-play renewable energy company but has built a solid portfolio of cash-generating assets.
BEPC stock is exchanging hands for $24 has a dividend yield of 5.88%. It recently announced a 5% dividend hike. The company is one of the rare renewable energy companies with a dividend of over 5%. It aims to grow the dividends in the range of 5% to 9% every year and deliver returns in the range of 12% to 15% annually.
It reported impressive financials in the fourth quarter with funds from operations standing at $1.1 billion and an additional 5,000 MW of capacity added to the portfolio. Solar remains its most successful segment and as the sector improves, we could see Brookfield Renewable move higher.
If you are looking to generate passive income while the renewable energy sector sees an improvement, it is time to grab BEPC stock.
On the date of publication, Vandita Jadeja 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.