Top Solar Stocks for March 2023

Top-performing solar stocks—including Enlight Renewable Energy, First Solar, and Array Technologies—have posted significant gains over the past year amid several quarters of record residential solar installations and the Inflation Reduction Act of August 2022, which provides tax incentives and other benefits to further accelerate the growth of renewable energy infrastructure.

Select solar stocks surged, and the benchmark Invesco Solar ETF (TAN) has gained 14% over the last 12 months, outshining the Russell 1000 Index's 4% decline. All company data below is as of Feb. 28, 2023.

Here are the top three solar stocks with the best value, the fastest growth, and the most momentum.

Best Value Solar Stocks

These are the solar stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

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• Daqo New Energy Corp.: Daqo is a Chinese solar energy company that manufactures polysilicon for sale to manufacturers of solar cells and modules. The company also builds photovoltaic wafers. In December 2022, Daqo announced expansion plans for its facility in Inner Mongolia, which it expects to provide a significant boost to its polysilicon production capacity.
• Brookfield Renewable Energy Corp.: Brookfield Renewable owns a portfolio of hydroelectric, wind, solar, and energy storage facilities across multiple continents, making it one of the world's biggest publicly traded pure-play renewable energy companies. The company reported "a record year for growth" and generated more than $1 billion in funds from operations (FFO) in 2022.
• Canadian Solar Inc.: Canadian Solar designs, builds, and sells solar equipment for residential, commercial, and industrial customers. The company's products include solar modules, inverters, and system kits. In a preannouncement of fourth quarter 2022 results, Canadian Solar said that it anticipates quarterly total module shipments of 6.4 gigawatts (GW) and guided for a total of 30 to 35 GW for the full year of 2023.

Fastest Growing Solar Stocks

These are the top solar stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.

Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

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• JinkoSolar Holding Co. Ltd.: JinkoSolar aims to cover the entire solar industry chain with its "vertically integrated" manufacturing capabilities. In its most recent earnings report, which covered the third quarter of 2022, JinkoSolar's gross profit grew more than 10% quarter over quarter and 137% year over year.
• Brookfield Renewable Energy Corp.: See company description above.
• Emeren Group Ltd.: Known as ReneSola Power until a rebranding in January 2023, solar company Emeren develops, constructs, and operates solar and energy storage projects around the world. In September 2022, the company announced the acquisition of a 50-megawatt solar farm in Branston, U.K.

Solar Stocks with the Most Momentum

These are the solar stocks that had the highest total return over the past 12 months.

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• Enlight Renewable Energy Ltd.: Enlight is a developer and owner of solar, wind, and energy storage projects in the U.S., Europe, and Israel. Listed on the Nasdaq and the Tel Aviv stock exchange, the company reported 148% year-over-year revenue growth for the third quarter of 2022.
• First Solar Inc.: First Solar designs and manufactures photovoltaic solar power systems and solar modules. It serves customers around the world. The company announced in mid-November 2022 that it plans to invest $1.1 billion to build its fourth American manufacturing facility, which will be located in Lawrence County, Alabama. First Solar's other American factories are in Ohio.
• Array Technologies Inc.: Array manufactures ground-mounting systems used in solar energy projects. The company sells its products to engineering, procurement, and construction firms and to large solar developers, independent power producers, and utilities. In October 2022, the company announced that it joined the United Nations Global Compact, which focuses on corporate sustainability.

The Impact of the Inflation Reduction Act on Solar Stocks

The Inflation Reduction Act, signed into law by President Biden in August 2022, is expected to have a significant impact on solar stocks. The law provides tax credits and rebates to incentivize Americans to use clean energy, including solar energy. The White House says that 7.5 million additional families will be able to install solar technology on their roofs with a 30% tax credit as a result of the law.

Overall, the law has the potential to significantly bolster demand for solar energy products. Solar stocks posted significant gains following the passage of the law.

Advantages of Investing in Solar Stocks

Two significant advantages of investing in solar stocks include the overall growth of the energy industry and the rapid growth in demand for alternative energy sources.

Market Size: The International Energy Agency (IEA) estimates that global energy investment rose 8% in 2022, reaching a total of $2.4 trillion, which is above the levels seen before the COVID-19 pandemic. Solar output increased 22% to 1,003 terawatt-hours (TWh) in 2021, a record increase in terms of output. Still, IEA researchers estimate output needs to increase sevenfold by 2030—or 25% annually—for the world to achieve net zero emissions by 2050.

Growth of Alternative Energy: The IEA expects policies in major economies to help boost annual investments in alternative energy to $2 trillion by 2030, representing an increase of more than 50% from current levels.

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