US Solar Market Sees Record Q3 Installations: 3 Stocks to Gain

The U.S. solar market, which witnessed a poor installation trend early last year during the onset of the coronavirus, has been showing improving trends since the third quarter of 2020. With a similar winning streak this year also, investors may keep stocks like First Solar FSLR, ReneSola SOL and Enphase Energy ENPH on their watchlist.

Record Q3 Installation

Keeping up its recent robust trend, the U.S. solar market installed 5.4 gigawatts-direct current (GWdc) of solar capacity in the third quarter of 2021, as reported by the Solar Energy Industries Association, in its latest Solar Market Insight Report. The installations reflected a solid 33% increase over the third quarter of 2020 and led to the largest Q3 on record.

America’s residential solar installations exceeded 1 GWdc and more than 130,000 systems in a single quarter for the first time. Moreover, utility-scale solar set another record for third-quarter installations at 3.8 GWdc.

Such impressive statistics should encourage solar investors, considering the fact that with a total of 15.7 GWdc installed so far this year, the U.S. solar market remains on track to easily exceed its 20 GWdc target in 2021.

Looking Ahead

Overcoming crucial challenges like supply chain constraints and the resultant price hike along with project delays, the U.S. solar market has been successful in achieving impressive installation figures. The prospects are bright for U.S. solar stocks, buoyed by some favorable trade-related actions adopted by the government as well as vigorous investments in the solar space from across the world.

For instance, on Nov 10, the U.S. Department of Commerce dismissed petitions to issue anti-dumping and countervailing duties on solar cells from Malaysia, Thailand, and Vietnam. This came as a relief as the duties would have otherwise doubled solar module price in the United States, as predicted by Wood Mackenzie, thereby causing further disruption in the nation’s solar market.

As far as investment in the U.S. solar market is concerned, it is imperative to mention that the U.S. fiscal 2022 budget included an investment plan of $386.6 million in the nation’s solar energy technologies, reflecting a solid 38% improvement over the prior fiscal figure. While robust corporate investments have been a major growth driver, such a solid government-induced investment strategy surely would boost U.S. solar stocks’ growth in the coming days.

Stocks in Focus

Below are given three U.S. solar stocks, each with a Zacks Rank #3 (Hold), that boast solid growth prospects and thus one should keep an eye on them considering the aforementioned developments. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

First Solar: Based in Tempe, AZ, First Solar is a leading global provider of comprehensive PV solar energy solutions and specializes in designing, manufacturing, and selling solar electric power modules using proprietary thin-film semiconductor technology. As of Sep 30, 2021, First Solar had almost 7.9 GWdc of total installed Series 6 nameplate production capacity across all its facilities, which it projects to double to 16 GWdc in 2024.

Such production ramp-up expectations should enable First Solar to maintain its position as the largest U.S. solar module manufacturer. FSLR stock boasts a long-term earnings growth rate of 10.8%.

ReneSola: Currently based in Stamford, CT, ReneSola is a solar project developer and operator, with robust pipeline projects worldwide. Outside China, the United States continues to be a large and lucrative market for ReneSola. As of Sep 30, 2021, the company had mid-to-late-stage projects of 464 MW in the United States.

Additionally, ReneSola has projects under development in the states of Florida, Pennsylvania, Illinois, and California. The Zacks Consensus Estimate for SOL’s 2021 earnings indicates growth of 166.7% from the prior-year quarter’s reported figure.

Enphase Energy: Based in Fermont, CA, Enphase enjoys a strong position as a leading U.S. manufacturer of microinverter. Apart from microinverters, the company also designs, develops, manufactures and sells home energy solutions, which connect energy generation, energy storage and control and communications management on one intelligent platform.

At the onset of fourth-quarter 2021, Enphase introduced its all-in-one Enphase Energy System with IQ8 solar microinverters for customers in North America. With IQ8 being Enphase's smartest microinverter, so far, this launch surely expands its footprint in the United States. The Zacks Consensus Estimate for ENPH’s 2021 earnings implies growth of 65% from the prior-year quarter’s reported figure.

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