In the bustling world of investments, feel-good rallies are rare but exhilarating phenomena. And right now, the solar sector is basking in a lot of sunshine. With triple-digit gains and bullish forecasts, the blazing ascent of solar stocks has become the darling of the market.
If you’re wondering whether the excitement is justified, or if it’s too late to catch this solar wave, you’re in the right place. Let’s break it down.
The Surging Momentum
This isn’t just speculative froth. Solar stocks have seen incredible valuations, turning heads like never before. Picture this: The Guggenheim Solar ETF (NYSEARCA: TAN), which serves as a barometer for the entire sector, has skyrocketed over 50% year-to-date. Within the last six months, it has surged over a sizzling 75%.
And while those gains are stellar, they can pale in comparison to those of the fund’s standout holdings. Here’s where the story gets even more compelling. Behemoths like First Solar (NASDAQ: FSLR), MEMC Electronic Materials (NYSE: WFR), and SunPower (NASDAQ: SPWR) have seen their stocks sprint ahead with gains approaching 100%, 165%, and a jaw-dropping 330% respectively over the same period.
Then, enter the financial powerhouse: Goldman Sachs. Despite recent incredible gains, they’ve now ramped up their bullish outlook for solar stocks, suggesting the boom isn’t just a flash in the pan but an enduring trend.
Editor's Note: Analysis and insight for this article were originally sourced sourced from our friends at InvestorPlace
First Solar (FSLR): A Powerhouse with 24.5% Potential Gain and Goldman’s Seal of Approval
First Solar has been a cornerstone in the solar industry, and its ascendancy continues unabated. Currently, this stock is the heavyweight in the Guggenheim Solar ETF, making it a pivotal player for investors to watch.
Investment Thesis: Over the past six months, FSLR’s shares have nearly doubled. Their dominance in the installation and operational efficiency of solar power systems is proving immensely profitable. With the global demand for clean energy nowhere near its peak, First Solar’s prospects seem bright.
Goldman Sachs’ Position: On Thursday, May 30th, Goldman solar analyst Brian Lee sent out a note to clients, upgrading FSLR to buy from neutral and raising his price target on shares to $64. If that doesn’t underscore confidence, what does? This suggests Goldman believes in continued robust growth and profitability.
Analyst Ratings and Forecasts:
| Metric | Value |
|---|---|
| Consensus Rating | Overweight |
| Average Price Target | $83.15 |
| Potential Gain | 24.5% |
| Number of Ratings | 22 |
Summary of Analysts’ Outlook: Analysts are generally bullish on First Solar, with a consensus “Overweight” rating. The average price target of $83.15 suggests a potential gain of 24.5% from the current price. This optimism is likely driven by the company’s strong growth prospects in the renewable energy sector, its leadership in the solar industry, and its improving financial performance.
MEMC Electronic Materials (WFR): A Stellar Recovery
MEMC, too, has positioned itself aggressively within the solar sector, exemplified by its impressive rally. The stock has surged by a striking 165% in just six months, signifying a strong recovery and bright future.
Investment Thesis: MEMC plays a crucial role in producing high-quality polysilicon, a cornerstone for solar panels. Given the essential nature of this material, MEMC’s stock price reflects heightened demand and a bullish outlook on solar energy’s future.
Goldman Sachs’ Position: Not just content with upgrading it—they added it to their Conviction Buy List—Goldman Sachs has pegged a sharply raised price target at $10. This vote of confidence elevates MEMC within the ranks of must-watch stocks with substantial return potential in the solar market.
Analyst Ratings and Forecasts:
| Metric | Value |
|---|---|
| Consensus Rating | Hold |
| Average Price Target | $34.50 |
| Potential Gain | 24.1% |
| Number of Ratings | 14 |
Summary of Analysts’ Outlook: Analysts have a neutral outlook on Weatherford International, with a consensus rating of “Hold”. The average price target suggests a potential gain of 24.1% from the current price. While some analysts expect the company to benefit from its cost-cutting initiatives and growing demand for its services, others are concerned about the highly competitive industry and Weatherford’s significant debt levels.
SunPower (SPWR): Breakout Stock with Astonishing 330% Growth!
Here’s the crown jewel. SunPower has been nothing short of phenomenal, with its stock’s meteoric rise nearing 330% in six months.
Investment Thesis: SunPower’s technological prowess and global reach are evident. Their innovative approach to solar solutions has cemented their reputation, and consequently, their stock has prospered. This triple-digit growth indicates not just market acceptance, but also superior operational execution.
Goldman Sachs’ Position: A big swing—from sell to neutral—reflects a dramatically improved outlook from a previously bearish stance. They’ve also tagged an $18 price target on SunPower, marking a significant shift and shedding light on its expansive growth potential.
Analyst Ratings and Forecasts:
| Metric | Value |
|---|---|
| Consensus Rating | Overweight |
| Average Price Target | $24.50 |
| Potential Gain | 34.1% |
| Number of Ratings | 13 |
Summary of Analysts’ Outlook: Analysts have a positive outlook on SunPower Corporation, with a consensus rating of Overweight. The average price target of $24.50 implies a potential gain of 34.1% from the current price. This suggests that analysts believe the stock has upside potential and may be undervalued.
Guggenheim Solar ETF (TAN): Broad Exposure with Impressive Gains Simplified
For those cautious yet eager to tap into solar energy’s golden era, the Guggenheim Solar ETF offers a diversified play.
Investment Thesis: Climbing 50% year-to-date and 75% in the last six months, TAN makes a compelling case. The ETF encapsulates the collective gains of top solar stocks, giving investors broad exposure to the sector without the risk tied to individual stocks.
Analyst Ratings and Forecasts:
| Category | Value |
|---|---|
| Consensus Rating | Overweight |
| Average Price Target | $94.17 |
| Potential Gain | 14.1% | Number of Ratings | 7 |
Summary of Analysts’ Outlook: Analysts have a positive outlook on TAN, with a consensus rating of Overweight. The average price target of $94.17 suggests a potential gain of 14.1% from the current price. This indicates that analysts believe the ETF has upside potential and is a good investment opportunity.
The Expert’s Outlook
Financial luminaries and market watchers are univocal about one thing: Solar’s golden days are here, and there’s still a lot of sunshine left to bask in. Goldman Sachs’ backing, even at this stage, points to a continued runway for earnings growth fueled by surging global demand—from China and Japan to the United States.
Brian Lee from Goldman Sachs has revised targets upwards for key solar players, emphasizing sunny prospects for immediate earnings growth. While some fear that the sector’s explosive rise might suggest it’s time to sell, in reality, compelling demand signals are screaming opportunity.
Analysts arriving late to the party is nothing new—perhaps late to recognize the soaring strengths, but their arrival still underscores robust opportunities. As Jim Woods humorously puts it, it’s akin to a research department discovering that bees are bullish on honey. However, the implication remains: the sector’s strong demand metrics mean there’s likely more heat to come.
Eyes on the solar sector, Market Monitors. This trendy industry’s blistering momentum is not just an incidental spike but hints at sustained gains. Stay tuned and consider how these expert endorsements can shape your next strategic moves in the green energy domain.