Goldman Sachs Says Solar Stocks Are Poised for a Huge 2020

Energy

Published: January 15, 2020 7:35 am

Last Updated: January 30, 2020 11:13 am

After a solid 2019, the outlook for the top clean technology solar stocks looks very promising for 2020. When you toss in the geopolitical issues that arose in the Middle East recently, the industry may be even more attractive. While the drive for clean technology and energy generation remains at the forefront of important current issues, these stocks tend to go in-and-out of favor.

In a recent research report, Goldman Sachs is positive on some of the top companies in the industry, and the analyst noted this when discussing the 2020 potential:

Following last year’s cyclical bounce-back, we see solar stocks poised to outperform again in 2020 on the back of strong demand fundamentals. Our forecast calls for more than 20% growth in 2020 and a 10% annual compounded annual growth rate through 2023 as we see solar power entering a secular growth phase, driven by costs as opposed to policy. In particular, we favor names with potential for earnings power inflection and/or idiosyncratic, new product driven upside against this growth backdrop.

These four top stocks are rated Buy, and they all have massive upside to their Goldman Sachs price targets.

First Solar

This top company is a top pick for 2020 and on the Goldman Sachs Conviction List of favorite stocks to buy. First Solar Inc. (NASDAQ: FSLR) is the largest vertically integrated solar manufacturer in the United States. The company uses a specialized cadmium telluride (thin film) based panel, which is different from most other panels, which are silicon based. First Solar engages in manufacturing and has planned 6 GW of capacity by 2020, with revenues increasingly coming from module sales.

First Solar also develops and sells downstream solar projects and has created some of the largest solar installations in the country. While there have been some trade-related concerns, solid earnings should keep a nice tailwind behind the shares. With systems business and module guidance very achievable, this is perhaps the strongest player in the industry.

Goldman Sachs has a strong $81 price objective for the shares, which compares with a lower consensus price target on Wall Street of $70.91. The stock was last seen on Tuesday trading at $58.78 per share.

Enphase Energy

While it is somewhat off the radar, this is another top pick at Goldman Sachs for 2020. Enphase Energy Inc. (NASDAQ: ENPH) is a global energy technology company that delivers smart, easy-to-use solutions that connect solar generation, storage and management on one intelligent platform.

The company revolutionized solar with its microinverter technology and produces the world’s only truly integrated solar plus storage solution. Enphase has shipped more than 23 million microinverters, and approximately a million Enphase-based systems have been deployed in 130 countries.

Enphase Energy recently announced that Solair, a commercial solar installation and green energy consulting firm based in Delaware, is deploying the company’s microinverters on commercial solar projects to precisely right-size systems for financial incentives and interconnection requirements, improve installation time and issue production guarantees with confidence.

The Goldman Sachs team loves the secular growth story on battery storage and the European exposure, and have set a $34 price target. The posted consensus target was last seen at $31, and the last trade on Tuesday came in at $30.20.