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  • Solar Stocks Worth Investing In For 2022

    Solar Stocks Worth Investing In For 2022

    The global solar industry has been performing in a top-notch manner, even prior to the boost that the Covid-19 phenomenon brought to it. Federal policies such as the Solar Investment tax credit, and wider initiatives such as the Paris Climate Agreement have catalyzed the growth of this rising giant. According to the Paris initiative, the global target for 2030 has been set at 5200 Gigawatts, whereas the standard for 2040 is at 14000 Gigawatts. All this comes as a spark for the global solar market, which is already enjoying tailwinds from its consistently declining costs of production.

    The most recent catalyst to drastically accelerate the growth of the solar industry is the Inflation Reduction Act, signed by President Joe Biden in mid-September. As part of the Act, a further $369 billion is being allocated to domestic renewables. In light of this, solar stocks seem to be in high demand among market participants. For this reason, we bring to you a list, highlighting five top solar stocks that are worth investing in.

    Canadian Solar

    The first stock on this list is the global solar champion, Canadian Solar (NASDAQ: CSIQ). Canadian Solar is one of the top names in the global solar markets, and it has structured itself in a manner so as to capture value at various levels of the segment.

    The company holds two core business segments, demonstrating world-class expertise in each. Canadian Solar’s first business segment is its manufacturing and installation one. This gives CSIQ exposure to long-term recurring revenue, especially since it offers service and maintenance agreements. At present, the company is dealing with over 3.1 gigawatts of operations under the segment, which management claims will surpass 20 gigawatts by 2026.

    On the other hand, Canadian Solar operates its global energy segment, which deals in the project management domains. Through this, the company develops, builds, and sells large-scale solar-power projects around the world. These projects range from develop-to-sell, build-to-sell, or build-to-own. The aforementioned exit strategies give CSIQ the flexibility to maximize its return. The pipeline of these projects presently totals up to 26 gigawatts of solar power.

    As a result of this robust business model, which gives the company a significant competitive edge, CSIQ has been flying high in terms of its financial performance. In its most recent quarterly report, the company saw its net income grow explosively by a staggering 572% on a year-on-year basis. For these reasons, CSIQ should be at the forefront while looking at the solar stocks to invest in.

    Maxeon Solar Technologies

    The second solar stock we present is the Singapore-based Maxeon Solar Technologies (NASDAQ: MAXN). The strength of this stock can be gauged by its price rise alone, which in the last six months amounted to almost 80%, whereas the S&P 500 declined by 14%.

    Like most players in the global solar industry, Maxeon too enjoys the strong tailwinds of opportunity and stands ready to climb high. However, there is much about this company in particular that makes it a difficult one for investors to ignore. Although it is a small-cap company valued at only $1 billion and is still in its negative EPS phase, its forward-looking prospects are extremely bright. For one, it recently renewed its contract with US photovoltaic specialist, SunPower which would enable it to continue supplies to the US and Canada until October 2023. Similarly, the company also penned an agreement with TotalEnergies to supply the company’s Danish Fields project in Texas with 400 megawatts of ultra-efficiency solar modules. Both these deals provide a substantial growth boost to the young company aiming to establish itself as a global leader.

    Furthermore, Maxeon Solar is excessively focused on driving down its solar panel costs through these strategic partnerships, which would enable it to gain a strong foothold in the North American markets. It also has finalized plans to establish a multi-gig solar production facility within the United States. This is a highly strategic move considering the legislative incentives the industry faces in the country.

    The final cherry on top for this high-growth emerging star is its financial performance. In its recent most quarter, Maxeon saw topline growth of 35%, indicating its success within the market it operates in. This is not a stock to take lightly for those seeking the gains of the lucrative world of solar.

    Array Technologies Inc.

    Next up we take a look at Array Technologies Inc., (NASDAQ: ARRY) a company that develops solar tracking systems that are essential to the optimization of solar projects on a utility-scale. The company was off to a dismal start since its IPO last year, given a price plummet that was caused by market-wide uncertainty in the wake of the post-Covid slowdown.

    Fast-forward to September 2022, ARRY appears to be in full-blown recovery mode, as a result of a number of wider factors. For one, the inflation reduction act, and similar policies issued by president Biden have changed the dynamics and prospects of the wider industry to a substantial degree. Secondly, Array’s solar tracking system, which adjusts panel placement in real time to face the sun, is seeing an influx in demand, given the energy optimization the concept promises. Finally, the prices of steel, which are a primary component of Array Technologies’ products offer wider profit margins and bottom-line growth.

    Given the shift in the playing field, ARRY has more than doubled its quarterly revenue in June 2022, from $197 million to $425 million, on a year-on-year basis. The wider market also appears to be confident in its prospects, considering its 36% climb in the bearish six months prior. It is evident that ARRY has good times ahead, hence making it a prime investment candidate for solar stocks would be a good choice.

    Enphase Energy Inc.

    The fourth solar stock we turn to is Enphase Energy Inc., (NASDAQ: ENPH) an American photovoltaic player working in the home energy solutions market. Although its stock has seen a price doubling from $152 to $305 in the last 12 months alone, it has a substantial growth runway ahead of it. In just the last 12 months, ENPH saw its revenue climb by 64%, whereas its earnings grew by 13%.

    The biggest opportunity that Enphase faces come from Europe, just as the company is on the verge of expanding to international markets. Given the tensions that currently exist between the EU and Russia, the entire European continent is on the verge of an energy crisis this oncoming winter, which could prove devastating to tens of millions of citizens in a number of countries. Amid such circumstances, solar-powered home energy solutions, as Enphase Energy offers could very well be the hero of the moment and face skyrocketing demand.

    Enphase Energy, following the acquisition of key American companies, has vastly expanded its installation and integration network, which allows it to meet demand at a global level. Its various manufacturing facilities in India, China as well as Mexico demonstrate the robustness of its distribution network and supply chain. Its very next manufacturing facility comes in Romania, which will launch later this year, indicating the company’s ambitions in the European continent.

    Given the oncoming opportunity in Europe, and potentially the world, Enphase is optimal for the capture of market share to a major degree. Its product pipeline appears to be one of the most promising in the solar competitive space, offering home power management tools, and solar-based solutions fit for homes as well as small businesses. The stock, for these reasons, is definitely one to keep on your radar among other solar stocks.

    Daqo New Energy

    The final stock on this list is the China-based, global world leader, Daqo New Energy (NYSE: DQ). Daqo, along with its subsidiaries is a producer and supplier of polysilicon, the most critical component that goes into solar panels. The company, given its substantial cost advantage, occupies a 13% share of the global polysilicon market.

    In just the last decade, Chinese companies have excelled substantially within this domain, pushing their European counterparts off their positions in market leadership. At present, the top 3 polysilicon players are all based in China, with Daqo being the largest player of them all, with rocketing growth.

    The company’s revenue from 2019 to 2021 stood at $350 million, $675 million, and $1.7 billion respectively. Analysts place their revenue consensus estimate for 2022 at a staggering $4.4 billion mark. Such explosive fundamental growth indicates possible domination of the solar markets, owing to its successful cost leadership, which competitors are unable to match. Similarly, earnings per share during these three years exploded from $0.43 to $21.50 a share.

    Despite such strong fundamental prospects, the DQ price has barely changed in the last 12 months, signaling a possible undervaluation of a substantial degree. The fact that the company’s forward PE ratio stands at 2.7, compared to the wider sector average of 16.7 further reinforces this view. DQ, therefore, is a great opportunity for those seeking both value and growth in solar stocks.

    Conclusion

    There appears to be agreement amongst all classes of investors that the next big opportunity exists within the world of solar. With so many tailwinds supporting it, and a number of policy incentives, its hard to not sway toward the investing opportunities that solar power offers to the world at large. As costs continue to decline, and countries strive to attain self-sufficiency, in terms of energy, the industry as a whole is likely to reach new heights, which will eventually challenge the mighty fossil fuel industry. Each of the solar stocks mentioned in this article allows investors to be a part of the booming rise the industry is on the verge of experiencing.

  • Top 5 Upgraded Stocks For Q3

    When uncertainty clouds the markets, investors have little room to take confident positions in stocks of their preference. This is precisely the condition of the financial markets today, at a global level. During these circumstances, the prudent approach would be to look to the upgraded stocks of financial analysts and experts. The recommendations put forth by analysts do hold significant weight, as they are the outcome of rigorous technical analysis, and a study of fundamentals, momentum, and wider trends. For this reason, many, especially beginner investors, turn to analysts’ guidance.

    Analysts delivering guidance.

    The first two quarters of 2022 have both been rocky and unpredictable, by a wide array of metrics. With the market entering into bear territory, many had lost fortunes amassed over several years. Looking toward the next quarter, we observe that there is little to say as to which direction things will take. In light of this, we explore the top 5 stocks analysts recommend for the third quarter of the current financial year.

    EMCOR Group

    In terms of analyst favorites in the upcoming months, EMCOR Group Inc (NYSE: EME) stands as one of the leading names in upgraded stocks. The company specializes in complex activities in the domain of electrical and mechanical construction at an industrial level. Ever since the performance slowdown during the pandemic in 2020, this specialist contractor has been seeing a surge in both its top and bottom-line figures. While the stock is presently trading at $114, its target price stands at almost $138. Moreover, just in FY22Q2, Sidoti analyst, Brian Russo upgraded the position on EME from neutral to buy.

    The extent of impressive performance can be glanced at in its recent quarter two results for 2022. Where analysts had set a consensus quarterly revenue of $2.6 billion, the company managed to successfully deliver $2.71 billion. This reflected an over-achievement amounting to $110 million. Even more impressive was the company’s bottom-line performance. Where analysts expected a quarterly EPS figure of $1.70, EMCOR had gone on to earn an impressive $1.99 per share.

    EMCOR Group, owing to its robust market position has been on a rapid growth trend. Its revenue climbed from $7.55 billion to $9.18 billion between 2016 and 2019. This took a dip during the pandemic in 2020, falling to $8.8 billion. 2021 had thus brought an impressive rebound, with revenue climbing up to $9.9 billion, ensuring companies’ position in upgraded stocks. Profitability throughout these periods has also been surging. In just a single year, the company managed to nearly triple its net earnings of $132.9 million in 2020, to an incredible $383.5 million in 2021.

    The reason this stock is so favored amongst analysts is due to its trading at discount levels. This is a result of the bear market conditions, where the S&P 500 dipped by 7.85% in the last 12 months. During this time, EME fell by a similar magnitude of 6.89%. A slip by this level is significant, especially given the rock-solid fundamentals and impressive financial growth the company is experiencing.

    SeaWorld Entertainment

    Another big name stock on the analysts’ radar has been the theme park and entertainment company, SeaWorld Entertainment Inc. (NYSE: SEAS), which operates several theme parks and water park attractions across several US states. Recently, Deutsche Bank labeled SEAS as being a ‘Catalyst Call: Buy Idea’, as a result of its top and bottom-line results being “achievable” for Q2, and the full year. With a present price of $45 per share, analysts have placed the stock’s target at over $78, indicating significant upside potential.

    The reason for this shift comes as the company continues to deliver impressive revenue and earnings figures. After the lifting of Covid-related restrictions placed on the industry, SEAS is once again operating at full-blown capacity. It has also managed to increase its potential revenue capacity per person from $66 in 2019 to $80 in its most recent quarter. This explains its impressive topline improvement and its placement in the list of upgraded stocks.

    Despite this strong fundamental position, SEAS has fallen from over $76, down to a mere $45, in just the last three months alone. A drop of 40%, without a fundamental deficiency, points to a significant undervaluation, which analysts have evidently identified.

    In fact, SeaWorld’s financials are so strong, that its management has been actively seeking to expand through acquisitions. The company had initiated talks with Cedar Fair LP (NYSE: FUN) for an acquisition, earlier this year. Although the talks were unsuccessful, it points to the company’s short and long-term strategic vision geared toward expansion. Moreover, during Q2, SEAS also announced a share buyback program worth $250 million. This indicates its willingness to return value to its shareholders.

    Enphase Energy

    Enphase Energy Inc. (NASDAQ: ENPH) is one stock that has been in the center of the market spotlight for many investors. Enphase Energy is a solar and home energy solutions company. Despite incredible macroeconomic headwinds, that have forced even corporate giants to shed significant market value, ENPH has performed remarkably. In just the last six months, the stock has almost doubled its price from $140 to $276.

    Many have argued that the hype has essentially overvalued ENPH, considering the trajectory of the wider market. However, some highly credible analysts feel that this is no overvaluation, and the price is trading close to the stock’s intrinsic value. Goldman Sachs, for instance, has raised the ENPH target price from its previous $244 to $290. Similarly, Credit Suisse has upgraded its classification of the stock from neutral to outperform, with the target price set at $281. These analyst positions indicate that, despite investor concerns, the stock remains a buy.

    These analysts’ stances on the stock are far from unsubstantiated, given some significant tailwinds supporting the wider industry. Enphase Energy, the microinverter market leader in the US, as well as a premium player in America’s MLPE duopoly stands well positioned to soar as a result of these tailwinds. Its capital-light business model, which gives it an edge above its peers in the industry, delivers significant cash flow to support business growth. Additionally, its expansion into new and lucrative business markets, such as the EV charging space, further stands to enhance its upside potential. All of these high-promise opportunities, coupled with the company’s strong execution, as observed in its stellar revenue and earnings growth, reinforces the analysts’ optimism regarding ENPH.

    Wingstop Inc.

    Analysts appear bullish on the stock of Wingstop Inc. (NASDAQ: WING). The company franchises and operates restaurants across 44 American states, and 7 countries in the world. WING is presently trading at $116, yet its target price has been set at $135, indicating an upside potential of 16%. Brokerage and research firm, Cowen, recently bumped up the target price of WING to $140. This suggests that the upside potential could be as high as 21%, at present levels.

    In just the past month, WING gained by 68%, so an additional 21% upside would amount to its price essentially doubling from where it stood in late June of 2022.

    Growth at such levels and its position in upgraded stocks comes as no surprise considering Wingstop management’s ambitions and their ability to execute. There is a renewed emphasis on brand awareness through innovative marketing and customer-oriented ads on social platforms. These moves signal a significant jump in the company’s ambitions, to which it will allocate up to $50 million per annum. Moreover, the company leadership has also decided to increase the per restaurant contribution to national marketing from 4% to 5%.

    Given that Wingstop stands on the verge of dynamically scaling up, and expanding its business, analysts are confident of the growth trajectory its stock is inevitably going to ride upon.

    Exxon Mobil

    The final stock we present is that of the globally renowned oil and gas company, Exxon Mobil Corporation (NYSE: XOM). The strength of the stock’s fundamentals, combined with its stock market performance, points to possibly significant upside potential. The last few months have brought in record high levels of crude oil, catalyzed by supply chain disruptions from Eastern Europe, and sanctions on giant oil producer, Russia. The result was soaring levels of inflation, which particularly impacted crude oil.

    With market prices of oil reaching new heights, the outcome for oil producers like Exxon Mobil was record-high profit margins. The surge in revenue also improved liquidity figures substantially. Despite such renewed growth opportunity, the stock’s $90 price is still marginally close to its price in 2018, which did not offer such a strong opportunity. This price is lower than anticipated given the drop in global oil prices in the last month. Despite this, however, the future looks extremely bright for XOM.

    The company is taking the patient route of using its short-term explosive gains to enhance its longer-term financial sustainability. The CEO of Exxon Mobil has disclosed some of these forward-looking plans in the company’s recent earnings call:

    “We are making outstanding progress on our high-value growth developments in Guyana, the Permian and LNG. Our new Corpus Christi Chemical Complex is up and running ahead of schedule and generated positive earnings and cash flow in its first quarter of operations.” He had also gone on to discuss the company’s strategy of pursuing low-carbon, biofuels, and hydrogen-based energy solutions, in light of the global energy transition.

    Perhaps these are the factors as to why analysts remain so optimistic regarding XOM and the company have successfully made its place 5 best-upgraded stocks. Earlier in July, Piper Sandler bumped up its target price from $102 to $109, reclassifying it from neutral to overweight. Similarly, in June 2022, Credit Suisse upgraded the stock to an “outperformer” with a target of an impressive $125.

    Conclusion

    Analyst picks are the guiding light to the uncertain investor during times of turmoil. When market participants lose confidence in their outlook of stocks, the best route might just be to turn to the technical-minded. Analysts employ rigorous valuation models, whilst factoring in relevant trend-related variables. These approaches are usually objectively sound in identifying which stock holds upside potential worth investing in. The stocks discussed above are some of the top upgraded stock picks for Q3 of the present financial year.