It may take years before the whole world moves away from fossil fuels and becomes fully dependent on renewable energy sources. But with a greater emphasis on climate change and sustainability, companies are focusing on producing clean energy.
The solar power industry, in particular, has been flourishing and is expected to dominate the energy market of the future. Even as the coronavirus pandemic adversely affected several industries last year, the solar market was virtually unscathed as solar installations grew in 2020.
In this guide, we identify the ten best solar shares to buy in 2021, and we dig deeper into the details for five of them.
Where Can I Buy Solar Shares?
Solar company shares can be bought via brokers. Because there are a lot of things to factor in when choosing a broker — regulation status, tight spreads, low commissions, and more — we have already looked for some of the best brokers for you to consider.
What Are Solar Shares?
Solar power is the conversion of sunlight into electricity through a process known as the photoelectric effect. The most commonly used technique employs solar panels known as photovoltaics (PV).
Solar power is one of the fastest-growing renewable energy sources, with the installed solar PV capacity in Q3 2020 (in the USA) being sufficient to power up to 16.4 million homes. The momentum carried into 2021 as the outlook for this year looked favourable for an uptick in alternative energy demand.
How to Trade and Invest in Solar Shares?
Open a Trading Account
Open a share dealing, trading, or investment account with an online stockbroker within minutes by entering a few personal details. But bear in mind that you’ll have to prove your identity (e.g. by uploading a copy of your passport) before fully activating your account and being able to make withdrawals.
Choose Solar Shares
Although you should always do your own research into stocks before investing, you can use our top ten list of suggested solar stocks as a guide. Find these stocks in the online list provided by your broker, and click each one to see more information, including a price chart.
Place Your Trade
Once you’ve funded your account via one of the broker’s convenient payment methods, you can open a trade ticket for a stock to buy it immediately, or open an order ticket to buy it at a later time: e.g., when the market next opens or when a target price is reached. Either way, you’ll enter the number of shares you wish to purchase or the amount of money you wish to invest in the stock.
Top 10 Solar Shares to Buy
As we present our list of the top ten solar shares, it’s worth noting that these companies come from all sorts of sectors such as industrial, energy, and utilities. Each stock’s value could therefore be affected by varying fundamental factors.
- Enphase Energy
- SolarEdge Technologies
- Canadian Solar
- First Solar
- Consolidated Edison
- Brookfield Renewable Partners
- SolarWindow Technologies
- Sunnova Energy
- Daqo New Energy
1. Enphase Energy (NASDAQ: ENPH)
Enphase Energy is a technology company that develops home energy solutions based on solar power. It's the industry's top choice for microinverters, with 30 million solar inverters already delivered to customers around the world. This company’s revenues increased by 42.2% in Q3 2020 as the Biden presidency was expected to drive more growth in the solar sector.
Enphase Energy’s share price has surged in recent years, rising more than 200 times since 2017. This would have been a good penny stock purchase, and it might not be too late to get in on some of the action because the price fell back between January 2021 and May 2021 before beginning to rise again. Many investors make good money by buying shares on such dips.
2. SolarEdge Technologies (NASDAQ: SEDG)
SolarEdge Technologies is another solar inverter solutions company whose products cater to the residential market as well as commercial and small utility-scale installations. SolarEdge has solid finances, with over a billion dollars in cash. It is another company that was expected to benefit from the Biden administration.
The SolarEdge stock price soared in the two years to December 2020, which was no surprise since this company rose from being the 10th to the number one supplier of PV inverters. The share price falling back by around 30% between January and June 2021 may have presented an opportunity to buy on the dip.
3. Canadian Solar (CSIQ)
Canadian Solar manufactures solar cells, wafers, ingots, solar PV modules, solar power systems, and other solar products. It operates from multiple locations worldwide and has facilities in Canada, China, Indonesia, Vietnam, and Brazil.
Although Candian Solar shares are around four times higher in 2021 than they were in 2007, it’s been a rocky ride with the share price varying between $3 and $53 at various times. The year 2020 was a good year for Canadian Solar shares, and the share price dip (of about 27%) in the first six months of 2021 was consistent with other solar shares, thus possibly presenting an opportunity to buy on the dip.
4. First Solar (FSLR)
First Solar is a utility-scale PV power plant provider and a manufacturer of photovoltaic modules. It is the largest solar panel maker in the US but also services clients internationally. This year, First Solar sold the majority of its solar projects to wind developer Leeward Renewable Energy, to concentrate on manufacturing instead.
In the third quarter of 2020, First Solar reported an EPS of $1.45. Its stock price enjoyed a strong rally, jumping from the March low of $28.47 to $109.09 in December. By June 2021, the price has fallen back, thus presenting a possible buying opportunity.
5. Consolidated Edison (NYSE: ED)
Consolidated Edison is the second-largest solar energy producer in North America and ranks seventh in the world. It generated $12.5 billion in revenue in 2019.
The shares have trended steadily upwards since as far back as 1985 with a few pullbacks along the way. The most recent pullback in 2020/21 could be a good time to buy if you think the long-term uptrend will resume.
Expert Tip on Investing in Solar Shares“ While shares in solar companies can be cyclical and subject to government policy changes, the one-way journey from fossil fuels to renewable energy sources might convince you that it’s a good idea to build stakes in these companies whenever their share prices dip. ”- Ron Mendoza
Why Invest In Solar Shares?
According to the US Energy Information Administration (EIA), renewable energy sources generated 17% of US electricity in 2019. Solar power accounted for 2% of that figure, which was a 0.5% increase at a time when production of energy from all other alternative sources fell.
Investing in solar shares could give you a foothold into what could potentially be the leading energy source of the future.
Frequently Asked Questions
Any specific solar stock position can be protected with a stop order that will automatically sell your shares if the price starts to fall too far. You can protect your portfolio as a whole by practicing effective diversification.
Check with the tax authorities in your country, but as a general rule — yes — you will have to pay tax on your trading and investing profits.
If a broker advertises the fact that it is regulated by a particular regulator, you should be able to search the relevant regulatory authority’s online register to check for yourself.
You might be able to partially open a share dealing or trading account with an online broker without proving your identity. However, to fully activate your account and withdraw funds, you will most likely have to provide some identity verification documentation.
Whether solar or not, all stocks are traded on stock exchanges during their daily trading hours. Usually, this is 8 am to 4.30 pm (local time) on weekdays.
Most brokers have a minimum deposit requirement but it varies depending on the platform. Check with your broker before trading.