7 Solar Stocks to Sell Heading Into Q4

Given recent developments, you may be wondering why today we are talking about solar stocks to sell rather than buy. Between the incentives provided by the Inflation Reduction Act and the energy crisis in Europe, it may appear as if there are plenty of industry-specific tailwinds to outweigh the headwinds currently affecting the overall economy.

Yet while the future remains bright for this segment of the renewable energy space, that doesn’t mean every solar stock out there is a buy. For every high-quality play in the space, like solar inverter/battery products company Enphase Energy (NASDAQ:ENPH), there are scores of lower-quality plays.

Most of them have received little to no boost from the abovementioned positive headlines about solar in recent months. That’s not surprising. Secular growth tailwinds for the industry do little to outweigh their poor fundamentals.

Performing poorly during Q3, expect these seven solar stocks to sell to continue disappointing in Q4. Ahead of further losses, the best move now is to unplug them from your portfolio.

Ascent Solar Technologies (ASTI)

Ascent Solar Technologies (NASDAQ:ASTI) makes thin-film solar modules. Although founded back in 2005, it is still waiting for its liftoff moment. Barely out of the pre-revenue stage, it has reported just $1.3 million in sales over the past twelve months.

ASTI stock, which until August traded over-the-counter (OTC), has been a bad bet for investors. Over the past year, shares have shed more than 90% of their value. Yet even with this massive price decline, shares continue to be pricey. At around $6 per share today, this company has a market cap of nearly $200 million.

That’s a rich valuation, given both the low revenue figure and its heavy cash burn. Raising more cash on dilutive terms, there’s a high chance it continues to destroy shareholder value. This makes it anything but a bargain as it trades near its 52-week low.

This stock earns a D rating in my Portfolio Grader.

Azure Power Global (AZRE)

Azure Power Global (NYSE:AZRE) operates solar power plants in India. A renewable energy play and emerging markets play rolled into one, on paper it may sound like a great growth opportunity. However, in light of recent news, there are big red flags with this stock.

Late last month, AZRE stock nosedived after the company disclosed a whistleblower complaint about data manipulation at one of its subsidiaries. This, plus the sudden exit of former CEO Harsh Shah, has investors concerned that not everything here is on the up and up.

Only time will tell whether Azure Power will ride out its current difficulties or if it faces more trouble ahead. Still, with this uncertainty hovering over it, a recovery will take time to happen. Assuming it happens at all. Instead of waiting to see what’s next, it is best to cash out now, as shares have partially rebounded from their post-plunge low.

This stock earns a D rating in my Portfolio Grader.

Emcore Corporation (EMKR)

A maker of components for the aerospace and communications industries, Emcore Corporation (NASDAQ:EMKR) can also be considered a solar stock. It provides solar products used in space power applications.

What makes it one of the solar stocks to sell is that EMKR stock tanked earlier this year, due to horrendous results for its fiscal first quarter. In subsequent quarters, it has continued to report big declines in revenue, and big increases in net losses. For instance, in its fiscal third quarter (ending June 2022), sales fell around 27.5% on a sequential (quarter-over-quarter) basis.

Net losses ballooned from $2.2 million, to $7.6 million. After reporting a big jump in revenue and a swing toward profitability during FY21, things are seriously moving in reverse. Emcore shares could continue top drop. Even after falling from around $7 per share at the start of 2022, to around $2.25 per share today.

This stock earns an F rating in my Portfolio Grader.

IES Holdings (IESC)

An electrical industrial infrastructure company, solar has become an increasingly important part of IES Holdings’ (NASDAQ:IESC) business. However, it was the post-pandemic recovery that fueled a move in price for shares from mid-2020 through the end of 2021.

Unfortunately, this strong run has essentially reversed course. After going from $20 per share to nearly $56 per share, IESC stock is now back down at $30 per share. Inflationary pressures have affected its profitability. For example, last quarter, its operating earnings fell by around 30%, and its net income fell more than 50%.

Throw in the potential for an economic slowdown due to rising interest rates, and it may have more challenges ahead in the coming year. Even as its big price decline may reflect much of this, it’s difficult to see shares bouncing back, until the macro situation improves. For now, it’s best to take a pass on IES.

This stock earns a D rating in my Portfolio Grader.

iSun Inc. (ISUN)

Like Ascent Solar, iSun Inc. (NASDAQ:ISUN) is another one of the small, unprofitable solar stocks to sell. A provider of solar engineering and construction services, iSun may in recent years have seen its revenue skyrocket, yet alongside top-line growth has been a big increase in its operating losses.

Over the past twelve months, the company has reported operating losses of $15.3 million. Given these losses, a high debt position (a result of its 2021 acquisition spree), it may need to raise more equity capital in order to de-lever its balance sheet.

This could mean more declines ahead for ISUN stock. It may be down nearly 90% from the all-time high it hit in early 2021, but don’t assume its low stock price and market cap ($41.4 million) means it’s all uphill from here. It could deliver another round of heavy losses from here.

This stock earns a D rating in my Portfolio Grader.

ReNew Energy Global (RNW)

Based in India, ReNew Energy Global (NASDAQ:RNW) operates scores of renewable energy projects throughout the second-largest country by population. At first glance, this may imply big growth potential, similar to the situation with Azure Power Global.

RNW stock may not have the kinds of red flags seen with AZRE stock. Even so, this is another solar stock you should avoid/sell. Between a high debt position, longstanding issues with past due receivables from one of its key customers, and other issues, it’s possible these negatives are not fully factored into its valuation.

At least, that’s the takeaway, based on its triple-digit forward earnings multiple (110.4x). The best move with ReNew Energy Global is to wait for a better entry point. At lower prices/lower valuation, you will be compensated for the risks inherent with this emerging markets renewable energy play.

This stock earns a D rating in my Portfolio Grader.

VivoPower (VVPR)

A diversified maker of clean energy solutions, VivoPower (NASDAQ:VVPR) is involved in more than just solar power systems. Among other ventures, it also has a subsidiary that converts Toyota (NYSE:TM) Land Cruisers used in mining operations into electric vehicles (EVs).

But as interesting as it may be as a company, it’s a different story when it comes to VVPR stock itself. While big when it comes to ambition, like the other small, fledgling solar stocks to sell listed above, the company has experienced continued cash burn. To keep the lights on, it resorted to a shelf issuance of new shares back in July.

Likely needing even more cash to get its various clean energy businesses off the ground, more dilution likely lies ahead. As is common with using equity issuance as a financing method, VVPR stock, as hard-hit as it may be, could continue to drop.

This stock earns a D rating in my Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.