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3 Solar Stocks to Watch as Clean Energy Drive Accelerates

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Solar energy has emerged as one of the major forms of renewable sources of power on the continued shift toward environment-friendly alternatives. Notably, the United States is also witnessing this rapid transition. Per a report by the U.S. Energy Information Administration, renewables are set to comprise most of the new electricity generating capacity in 2021 with solar accounting for the largest share at 39%.

Moreover, the report stated that developers and plant owners estimate the addition of utility-scale solar capacity to set a new record in 2021, by adding 15.4 gigawatts (“GW”) of capacity to the grid followed by nearly 12 GW added last year, based on reported additions through October at 6.0 GW and scheduled additions of 5.7 GW in the last two months of 2020.

Meanwhile, both residential and non-residential solar sectors are expected to witness growth going forward. Notably, per a report by the Solar Energy Industries Association (“SEIA”), the residential solar segment is estimated to grow 13% in 2021 taking into consideration the labor shortages toward the end of 2020 along with the demand pull-in related to the solar investment tax reduction (“ITC”) in 2022. Notably, SEIA revised their 2021 outlook upward for Florida and Texas as installers continued to report rising sales of pipelines. Each of the markets are expected to install more than 300 megawatts in 2021, ranking only behind California. Moreover, SEIA stated that a combination of project delays and demand pull-in from ITC are set to bolster the non-residential solar segment to a record-setting high in 2021, at nearly 2.4 GWdc.

Falling Costs of Solar Help in Rapid Adoption

One of the factors that have boosted solar energy is the rapid fall in installation costs. In fact, per another report by SEIA, the cost to install solar has decreased by over 70% during the last decade. Notably, the report stated that an average-sized residential system dropped from a pre-incentive price of $40,000 in 2010 to around $20,000 in 2020.

Biden’s Focus on Renewables Likely to Boost the Industry

The solar industry is also set to receive a boost from President Joe Biden’s focus on renewables to combat climate change. Toward that end, President Biden signed an executive order on his inaugural day as President on Jan 20, and the United States rejoined the Paris Agreement, which is aimed at strengthening the global response to the threat of climate change.

3 Stocks to Watch Out For

The solar industry in the United States seems poised to witness growth in the future as the focus shifts to renewable energy to battle climate change. Hence, this seems to be a good time to take a look at companies focused on solar energy that could make the most of this upswing going forward. Notably, we have selected three such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enphase Energy, Inc. (ENPH - Free Report) , together with its subsidiaries, designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 9.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 43.1%.

Array Technologies, Inc. (ARRY - Free Report) provides solar tracking solutions and services for utility-scale projects. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 2.4% over the past 60 days. The company’s expected earnings growth rate for next five years is 22%.

First Solar, Inc. (FSLR - Free Report) provides photovoltaic solar energy solutions in the United States and internationally. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 0.3% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

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