The future of solar is bright and governments across the world are trying their best to achieve their goal to transition towards a carbon-free electric grid. This is spelling big things for solar stocks. While it is easier said than done, we have seen tremendous progress this year and I believe this momentum is set to continue throughout 2024. As per a report from the World Economic Forum, the demand for solar energy is set to increase nine times by 2030.
Solar companies rely on debt financing and they have been under pressure in the past few months. While some solar stocks have dropped more than others, this can be seen as an opportunity to buy as it could lead to massive gains. The solar energy sector is hot and some stocks have already hit new highs but a pullback from these highs means it is time to make your move. The long-term outlook for such stocks is positive and there is immense upside potential for these stocks. Let’s take a look at the three solar energy stocks to buy for massive gains in the long term.
Brookfield Renewable (BEPC)
A top solar stock today, Brookfield Renewable (NYSE:BEPC) is a diversified company that has a presence in solar, wind and hydroelectric power as well as batteries. The company works with utilities to sell power and this helps it maintain a steady cash flow. It has recently partnered with Origin Energy which will allow it to enter the massive Australian market.
Besides that, the company reported strong revenue numbers in the second quarter. It closed investment deals valuing $8 billion in the first quarter and added 700 megawatts of capacity to the portfolio. Additionally, it reported a revenue of $719 million and already has future projects of 132 gigawatts in the pipeline.
Countries have started making big investments in the renewable energy sector and this will help Brookfield in the long term. The company has a solid history, a strong track record of delivering impressive returns and boasts an impressive dividend yield of 5.88%. Exchanging hands at $23 today, the stock is down 28% in the past six months and 15% down year to date.
However, this drop is a good chance to load up on the stock since it can bounce back in the coming year. BEPC stock is low-risk, generates passive income, and could grow your money if you hold it for the long term. The stock is an ideal choice for investors looking for one renewable stock that has a presence across multiple industries.
First Solar (FSLR)
A pure-play solar power company, First Solar (NASDAQ:FSLR) makes solar panels and has a process where it covers the complete life cycle of its products, which include recycling of the panels sold to residential and commercial clients. The company is a major player in the industry and is riding high on the growing demand for panels.
It saw sales of $811 million in the recent quarter, which is an impressive 30.6% year-over-year increase. First Solar aims to hit sales of $3.4 billion to $3.6 billion for the year. It also has a backlog of 71.6 gigawatts which will last until 2027. The company reported more than a 200% increase in the net income to hit $170.6 million and posted an earnings per share (EPS) of $1.89.
Its third-quarter results will be interesting to watch. The company is leaving no stone unturned to achieve its goals and has a new production unit coming up in the United States by 2026. This will be its fifth production unit and it is investing $1.1 billion for it.
This company has a boundless potential and it has a cash reserve of $1.5 billion which offers the necessary liquidity for expansion purposes. FSLR stock has seen a slight dip in the past six months and has gone from $231 in May to $151 today. This is a golden opportunity to bag the stock.
First Solar has already established itself as a strong industry player and its future looks extremely bright. Citi has a price target of $200 for the stock while Piper Sandler has a target of $235. FSLR is a highly undervalued stock with a massive upside potential.
SolarEdge Technologies (SEDG)
The next solar energy stock to watch out for is SolarEdge Technologies (NASDAQ:SEDG). The company is also a pure-play solar stock that hasn’t had a good year so far. The stock has lost half of its value this year despite delivering solid financials.
It saw revenue growth due to the growing demand for solar inverters in Europe and as the global demand grows. SolarEdge Technologies will allow the company to gain a larger market share. The company delivered a revenue of $991 million, 36% year-over-year growth and the net income came in at $120 million, a whopping 692% rise. It expects the third quarter revenue to come between $880 million and $920 million.
While solar power is still a small percentage of the total electricity generation globally, there will be a significant rise in demand throughout the next few years. Countries are focusing on solar power and looking for ways to make the most of the energy. Exchanging hands for $124 today, the stock is down 56% year to date.
The stock was as high as $335 last December but has lost most of its value right now. However, do not write it off yet and snap up the stock while it is trading at a huge discount. I believe the worst is over for the company and it could have a smashing 2024. I would like to see the stock hit $200 before the end of the year. For now, this solar stock is a buy-and-hold as we transition towards renewable energy sources.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.