3 Solar Stocks That Could Be Multibaggers in the Making: July Edition
The Global X Solar ETF (NASDAQ:RAYS) has slumped by more than 40% year-over-year (YOY), illustrating that investors have abandoned solar stocks. However, as an incurable contrarian, I believe the RAYS ETF’s downturn signals a buying opportunity within the solar industry.
What’s my premise for the abovementioned claim? Well, the solar industry is forecasted to grow at an annualized rate of 16.04% until 2032, illustrating its systematic support. Furthermore, the solar industry has yet to consolidate, meaning cyclical swings in solar stocks are normal. As such, I believe a “buy the dip” opportunity has emerged, presenting investors with an opportunity to tap into asymmetrical returns.
Considering the above, I screened for three best-in-class solar stocks. I applied a robust screening process, emphasizing fundamental aspects, event-driven activities and company valuations. Additionally, I phased in technical analysis wherever necessary.
Without further delay, let’s examine the three solar stocks worth considering this month.
First Solar (FSLR)
First Solar (NASDAQ:FSLR) is a favorite at Deutsche Bank (NYSE:DB), which recently stated that First Solar is set to expand in the U.S. Although the bank’s claim is an isolated observation, it carries gravitas and sets a baseline for further analysis of FSLR stock.
Another positive about First Solar is its earnings momentum. The company recently reported its first-quarter fiscal results, revealing a revenue beat of $71.9 million and an earnings-per-share beat of 22 cents. Moreover, First Solar reported a 78.3-gigawatt backlog, providing its income statement plenty of runway leading into the tail end of the year.
Furthermore, First Solar’s price multiples seem well-placed. For example, FSLR stock’s price-to-earnings-growth ratio of 0.47x suggests it is a growth-at-a-reasonable price opportunity. Additionally, FSLR stock has a price-to-sales ratio of 6.27x, which I deem grossly undervalued, given the company’s resilient growth trajectory.
I’m incredibly bullish about FSLR stock’s prospects, folks!
JinkoSolar (JKS)
JinkoSolar (NYSE:JKS) has shed more than half its market value in the past year amid a series of systematic headwinds. However, I think the stock has dipped into buying territory. Here’s why.
Despite its recent struggles, JinkSolar’s fundamentals remain robust. For instance, the company recently communicated its first-quarter financial and shipment results, which exceeded my expectations. JKS’s broad-based shipments settled at 21,907 megawatts, up by 51.2% YOY, illustrating a rebound in consumer demand. Moreover, the firm’s first-quarter earnings-per-average-diluted-share beat estimates by $1.04, conveying underestimated efficiencies.
Collectively, the aforementioned variables set the tone from a fundamental perspective. However, JKS stock’s financial market-based variables are even more telling. For example, JKS stock has a price-to-earnings ratio of merely 3.07x, indicating absolute value. Additionally, JinkoSolar has a respectable forward dividend yield of 6.9%, which adds a floor to its stock price.
Given the status of its salient variables, I believe JKS stock is a well-rounded asset with deep value attributes!
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) appeared in a Goldman Sachs (NYSE:GS) report earlier this month. The investment banking company touted the stock as a tactical opportunity. Although GS focused on ENPH’s pending July 23 earnings report, the research has a broader application, as it communicated Enhpase’s interim growth.
I included ENPH in the list for numerous reasons. However, my primary reasons pertain to product quality and operating capacity. For example, I enjoy Enphase Energy’s integrated business model, which allows the end user to operate lean inverter systems linked to an application. Moreover, Enphase Energy has installed more than four million systems in approximately 150 countries. This feat proves it has the necessary capacity to smooth its revenue via geographic diversification.
Furthermore, the company has telling financial market-based features. For instance, ENPH stock has a price-to-sales ratio of 8.55x, which is low, considering the firm’s five-year compound AGR of 39.48%. Additionally, ENPH stock trades below its 50-, 100-, and 200-day moving averages, suggesting a potential mean-reversion is in the offing.
ENPH stock is a risky bet. Nevertheless, superior returns are possible!
On the date of publication, Steve Booyens 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
