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Senate Okays $369B Energy Investment Plan: Solar Stocks to Gain

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The renewable energy industry has been growing ever since the U.S. Senate passed the Inflation Reduction Act of 2022 (“IRA”). To fight the ongoing climate crisis and strengthen the U.S. energy infrastructure, the IRA entails an investment of $369 billion over the next 10 years. This Climate Bill, which is part of IRA, is estimated to reduce the country’s carbon emissions by roughly 40% by 2030.

Such an investment should act as a catalyst for renewable energy amid rising energy prices and deepening climate problems. With solar constituting a prominent position in the clean energy space, such solid funding puts the spotlight on three established solar stocks, namely First Solar (FSLR - Free Report) , Enphase Energy (ENPH - Free Report) and SunPower (SPWR - Free Report) .

Highlights of the Climate Bill

Along with the incentive, the bill proclaims tax credits for homeowners using clean energy.  The Solar Investment Tax Credit (“ITC”), which is considered to be the most effective mechanism to boost solar adoption, has increased from 26% to 30% until 2033, thus making it more affordable for consumers. The energy storage division also gets a boost under the current IRA by including the ITC of 30% for standalone storage projects.

Such an incentive is likely to propel the demand for solar-based energy as consumers fight against rising utility bills. That said, the government would deploy 950 million solar panels and 2,300 grid-scale battery plants to power homes, businesses and communities with clean energy by 2030.

The government also plans to provide incentives to scale up the domestic solar production capacity of the nation. This would ensure the sustainability and timely delivery of key materials and reduce reliance on China.

Stocks to Consider

Considering the aforementioned factors, solar stocks that are poised to gain from the most aggressive climate investment plan ever taken by Congress are as follows:

First Solar is a leading global provider of comprehensive photovoltaic solar energy solutions. Its module segment is involved in the design, manufacturing and sale of solar modules. FSLR recently revealed plans to boost its production capacity of solar modules by investing $1.2 billion to bolster America’s domestic solar manufacturing capacity.

First Solar’s long-term earnings growth rate is pegged at 49.3%. The company boasts a four-quarter average earnings surprise of 13.74%. First Solar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enphase Energy enjoys a solid position in the solar market and manufactures fully integrated solar-plus-storage solutions. As of Jun 30, 2022, more than 48 million microinverters were shipped, while approximately 2.5 million Enphase residential and commercial systems were deployed in more than 140 countries.

The company boasts a long-term earnings growth rate of 47.10%. The Zacks Consensus Estimate for ENPH’s 2022 sales implies an improvement of 63% from the prior-year figure. Enphase Energy currently carries a Zacks Rank #2 (Buy).

SunPower is one of the most forward-integrated solar companies. The company added 19,700 customers in the second quarter, reflecting growth of 51% year over year. This expanded its total customer base to 463,600. The company expects residential customers in the range of 73,000-80,000 in 2022.

The Zacks Consensus Estimate for SPWR’s 2022 sales suggests a growth rate of 26.1% from the prior-year reported figure. The Zacks Consensus Estimate for its 2022 earnings indicates a growth rate of a solid 300% over 2021’s reported figure. SunPower has a Zacks Rank #3 at present.


In-Depth Zacks Research for the Tickers Above


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First Solar, Inc. (FSLR) - free report >>

SunPower Corporation (SPWR) - free report >>

Enphase Energy, Inc. (ENPH) - free report >>

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