Overall, 2019 turned out to be volatile for solar stocks. However, there were some bright spots among broader markets last year, which gained approximately 65%.
Solar stocks in 2019
Better-than-expected earnings and upbeat guidance boosted solar investors last year. Enphase Energy (ENPH) was the top gainer last year. The company rose by almost 450% in 2019. At the same time, top solar panel maker First Solar (FSLR) relatively underperformed its peers and rose 20% last year. We’ll have to see if the similar movement in these solar names continues this year. We’ll discuss how analysts look at solar stocks right now. Also, we’ll see which solar stock offers an attractive gain potential for 2020.
Top solar installer Vivint Solar (VSLR) stock offers a strong potential upside of more than 48% for the next 12 months. Analysts have given the stock a mean target price of $11.43 compared to its current market price of $7.7.
Among the seven analysts covering the stock, four recommend a “buy,” three recommend a “strong buy,” and none recommend a “hold” or a “sell.” Vivint Solar stock has fallen more than 20% from its 52-week high of $9.8 in August last year.
Vivint Solar stock has more than doubled in the last 12 months despite lower-than-expected earnings in the last few quarters. However, Vivint Solar’s top line was a relief for investors. The revenue growth kept increasing last year. Notably, the revenue growth averaged around 16% in 2019 compared to 2018.
Sunrun (RUN) has a mean target price of $20.4 compared to its current market price of $14.4. The target price implies an estimated upside of 42% for the next 12 months. Among the ten analysts covering the stock, six recommend a “buy,” two recommend a “strong buy,” and two recommend a “hold.” None of the analysts recommend a “sell.”
Sunrun stock rose more than 38% in the last 12 months. Hedge fund Tiger Global Management is betting big on this solar installer. The hedge fund held more than 25% in Sunrun as of October 8. Tiger Global Management has been consistently increasing its position in Sunrun for the last few quarters.
For the first three quarters of 2019, Sunrun managed to increase its revenues by around 20% YoY. The company returned to profits in the third quarter and reported a net income of $29 million on total revenues of $216 million. Sunrun’s fourth-quarter earnings paved the way for the stock in the short to medium term.
Enphase Energy and SolarEdge Technologies stocks rallied the most last year. They offer a dull upside potential this year based on analysts’ estimates. However, Enphase Energy stock has been strong recently. To learn more, read Enphase Energy Stock Starts Off 2020 with a Bang.
US solar industry
Solar power continued to have strong penetration in the US last year. In the third quarter, the US residential solar market reached record highs and installed 712 megawatts of PVs (photovoltaics), according to the Solar Energy Industries Association. The total installed PV capacity is expected to double in the next five years. The annual installations could reach 20.1 GWdc in 2021.
The solar industry is still in the growing phase. We might see solar power infiltrating more going forward. More homeowners will likely turn to solar power before the investment tax credit ends next year. Notably, higher demand and falling costs might benefit the solar and allied industries in the future.
First Solar (FSLR) stock offers an estimated upside of 26% for the next 12 months based on analysts’ mean target price of $70.5. Currently, the stock is trading at $55.8. Among the 16 analysts, eight recommend a “buy,” five recommend a “hold,” and three recommend a “strong buy.” Credit Suisse cut its target price from $61 to $59. Notably, Credit Suisse has given First Solar stock a “neutral” rating. JPMorgan Chase also cut its target price from $82 to $79 today.
Investors are hoping that First Solar’s revenues and earnings stabilize in 2020 after being tumultuous last year. Read How’s First Solar Stock Placed before 2020? to learn more about how the stock is placed in terms of valuation and where it might go from the current levels.
As we discussed previously, some solar stocks exhibited significant volatility last year. As a result, instead of exposure to a single solar name, investors could consider an ETF to get sector-side exposure. The Invesco Solar ETF (TAN) invests in 22 solar companies globally. TAN has risen more than 60% in the last 12 months. SolarEdge Technologies is the top holding in TAN with more than 10% right now. First Solar stock forms more than 9% in TAN.