Solar stocks have had a patchy 2023, amid high interest rates and supply chain challenges. However, while near-term issues persist, the sector could shine in 2024. Here is a collection of stocks to watch ahead of a potential recovery.
- Enphase Energy CEO Badri Kothandaraman sees the sector recovering in Q2 2024.
- SolarEdge will fall out of the S&P 500 when the index is rebalanced next week.
- Array Technologies has lowered its full-year revenue guidance due to delays impacting project timings.
The Solar Transition Company
In November, Sunrun [RUN] reported a $1.1bn loss for the third quarter (Q3) of 2023. However, the solar company installed 258.2MW of new solar in the three months to the end of September, while energy storage installations jumped 131% year-over-year. CEO Mary Powell said in the earnings press release that Sunrun is “rapidly transitioning to a storage-first company”, away from its background in residential solar power, due to challenging macroeconomic conditions.
The Revenue Decline Stock
Enphase Energy’s [ENPH] US revenue fell 16% quarter-over-quarter in Q3 due to macroeconomic conditions. Meanwhile, sales in Europe were down 34% from Q3 2022 “due to high inventory at our distribution partners along with a softening in demand in our key markets: the Netherlands, France, and Germany”. CEO Badri Kothandaraman said on the Q3 earnings call that the sector should start to recover in Q2 2024, adding the company is looking to diversify into other countries.
The Waning Demand Stock
SolarEdge [SEDG] is set to fall out of the S&P 500 when the index is rebalanced after the closing bell on 15 December — the stock will be replaced by Uber [UBER]. The SolarEdge share price has plunged 72.3% year-to-date through 8 December, with near-term demand for solar waning. Solar revenue for Q3 2023 was down 29% year-over-year, while overall results “fell short of our prior expectations and are reflecting a slow market environment”, said CEO Zvi Lando in the earnings release.
The Lowered Outlook Stock
Array Technologies [ARRY] lowered its full-year revenue forecast last month as it continues to be impacted by delays to project timings and deliveries — full-year revenue is expected to be between $1.5–$1.6m, down from a previously guided range of $1.65m–$1.7m. Despite this, CEO Kevin Hostetler said that “we continue to see positive momentum heading into 2024. We are seeing a steady increase in our domestic pipeline, which has more than doubled from the second quarter.”
The Solar Asset Sale Stock
Encavis’ [ENCVF] asset management division has offloaded a 93MW portfolio of solar and wind parks in several European countries on behalf of an institutional investor, it announced on 29 November — the two solar parks sold are situated in France and Italy. Encavis also announced in September that it’s partnering with Danish energy firm GreenGo to develop a 132MW solar park in Denmark.
Another Way to Invest in Solar
The Global X Solar ETF
The Global X Solar ETF [RAYS] holds all five stocks. As of 30 November, 59% of the portfolio is allocated to information technology and 26.9% to industrials. Utilities, materials and consumer discretionary have single-digit weightings. The fund is down 46% in the past year through 8 December and down 35.6% in the past six months.
The Invesco Solar ETF [TAN] also holds all five stocks. As of 8 December, information technology accounts for 52.8% of the portfolio, while utilities and industrials have weightings of 23.9% and 15.7% respectively. Financials and materials have single-digit allocations. The fund is down 41.7% in the past year and down 34.9% in the past six months.
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.