There’s arguably no other industry in the world today with the growth potential of solar. Worth $120 billion annually and growing each day, the solar industry is upending the electric industry one home at a time, and may even revolutionize the transportation industry in the near future as well. So, if you want to learn how to invest in solar energy stocks, you’ve chosen the right time.
With a potential market cap in the trillions and many solar stocks grossly undervalued to date, there’s no time like the present to jump on the solar gravy train. If you want to do just that and retire by 37, this article is for you. As you’ll soon see, the sky isn’t the limit, the sun is!
Tips to Invest in Solar Energy Stocks
Below you will find a list of tips to help you make the right investment decision.
1. Not All Solar Stocks are Created Equal
There are plenty of publicly traded solar energy companies on the exchanges today, but all solar stocks are definitely not created equal. Top solar panel manufacturers, such as First Solar and SunPower, are quite different from one another. The differences between them and smaller, riskier public solar panel manufacturing firms are even more glaring.
Plus, not all solar energy companies make solar panels. Some, like Vivint Solar and SolarCity purchase the panels and offer them to the public along with their financing and installation services. There are plenty of other differences between solar stocks as you’ll see below. However, one thing rings true: the best solar energy stocks have the potential to provide tremendous returns and fund your early retirement in no time at all.
2. Know Your Technology
Solar technology is improving each day, so the solar energy companies who embrace technology and put it to use are the ones who stand out from the pack. Whether you’re looking at investing in a solar panel maker or installer, understanding how their technology compares to the competition will help ensure you achieve both short and long-term success.
That being said, as the solar industry continues to grow, new technologies in relation to energy storage and management will also provide exciting investing opportunities.
3. Understand Your Market
When learning how to invest in solar energy stocks and choosing the best ones for your risk aversion and expected ROI, it’s also important to understand their market. For example, both First Solar and SunPower are two of the world’s largest solar firms. However, they both serve two very different markets. First Solar is a utility-scale solar panel supplier and project builder, while SunPower caters to the residential market.
The two are literally night and day. Residential growth is healthy, stable, and naturally tracking upward due to higher electric and lower solar panel costs. The commercial solar market, however, is more dependent on policy. That being said, for very different reasons both are more than suitable for your best solar energy stocks portfolio.
4. Policy Plays a Role
The solar industry is unfortunately highly dependent on policy and subsidies. Staying up to date on policies and subsidy changes can keep you ahead of the curve. With the end of the investment tax credit, or ITC, this year, companies like Vivint and SolarCity will no longer receive a 30 percent tax credit. This results in higher costs for consumers, which may hurt their bottom line.
For other companies, such as First Solar, policy surrounding access to the grid is important to consider. However, solar ETFs may offer some geodiversity to negate any location-specific grid issues. In any event, it’s important to stay up-to-date on current policies and subsidies as a solar energy investor.
5. Recognize Your Risks
Solar energy stocks are full of potential, but like any investment, they also have their risks. Companies like Evergreen Solar, Solyndra, and Suntech Power are proof of just how risky investing in solar can be. However, where there’s risk, there’s reward, and with the right solar energy stocks, the rewards can be massive. In fact, as you’ll soon find out, a few companies are poised for triple digit growth!
Nonetheless, for every winner there’s a loser, so it’s important to get to know the potential risks as well as the rewards when learning how to invest in solar energy stocks. With upside potential this big, you can’t afford not to be safe.
Invest in Solar Energy Stocks to Retire Early
Solar is becoming a legitimate player in the energy industry. It’s a fact even the most hardline solar industry bears can’t deny. With solar technology becoming less and less expensive every year and more and more people adopting it into their homes and way of life, there’s no time like now to invest in solar stocks. Right now, solar energy investors have an incredible opportunity to invest in stabile yet dynamic companies ready to capture their growing market share.
Despite down share prices, the solar industry is booming, and investors who place their chips on the right stock now can ride a tidal wave of growth for years and even decades to come. In fact, according to , the installed photovoltaic capacity of the U.S. nearly doubled in 2016 over the previous year. There are millions upon millions of homes across the U.S. alone. Can you imagine the profit possibilities?
It’s plain and simple; if you want to defy the odds and enjoy a life of early retirement, solar energy stocks are the vehicle to get you there.
Still not sure? Here’s an example:
Let’s say you cash out your 401k or invest $10,000 of your savings in a solar energy stock. Despite trading at $50 only one short year ago, its price has bottomed out and the stock is currently trading at $10 per share. You see the potential for a turnaround, so you purchase 1,000 shares. Within the next 12 months, the company gains unprecedented grid access, lands a huge commercial contract, and watches its price jump all the way back up to $48 on the backs of happy investors.
In this scenario, which isn’t all that unlikely, you would have turned your $10,000 into $38,000. Best of all, with the rapid growth of solar, $400 shareprices aren’t out of the question for the right companies. Just ask the folks at Apple and Google.
Best Solar Stocks
If you want to learn how to invest in solar energy stocks and limit your risk while maximizing your reward, only the best solar stocks will do. Investopedia and several other legitimate investment publications have annointed First Solar, Inc. (FSLR) the best opportunity in solar energy today. Up 10 percent for the year and trading nearly 30 points off its historical high, this industry titan is poised to provide healthy long-term profits.
SunPower Corporation (SPWR) is another solar industry stalwart looking to make plenty of investors flush with cash on a turnaround. The comapny is pouring money into new technology to improve their solar panel efficiency and become a player in utility-scale projects as well. Best of all, the stock is incredibly undervalued, making it an incredible buying opportunity. It’s currently trading at $6.88 per share. With a high of $40 in 2014, it’s ready to rebound in 2017 and beyond.
8point3 Energy Partners
The believes 8point3 Energy Partners is a stock to watch in 2017. 8point3 is a limited partnership of the two solar giants recommended above, giving it the resources and ability to sell electricity generated from utility-scale projects. Investors receive their share of the profits through an incredibly generous dividend yield. If you want to profit while continuing to learn how to invest in solar energy stocks, 8point3 is definitely worth considering.
The solar industry is booming right now, and there’s never been a better time to learn how to invest in solar energy stocks. Lucky for you, you not only now know what to look for when picking the best solar energy stocks, you even know which ones are the cream of the investment crop. This industry is only going to continue to grow, and investors who get in now will reap the rewards for decades to come. Do you have questions or tips on how to invest in solar energy stocks? Use the comment form below to share your ideas and thoughts with us!