Energy Business

Goldman Sachs Says Buy the Solar Stock Pullback Now: 4 Top Analyst Picks

One industry that received a huge tailwind with the election of President Biden was the solar companies, and with good reason. Even before the Biden administration took office, there had been a push for cleaner energy. While the mandates from the previous administration were far less than are expected from the current one, many of the top solar companies were doing very well.

In a new research report, Goldman Sachs remains positive on the industry and feels that now may be a good time to buy some of the top solar stocks, after a fair amount of recent selling. The report noted this:

Despite a sharp pullback in solar stocks over the past month (-23% vs. 1% for Russell 2000), we believe there are multiple reasons to remain selectively positive on the group, including:

(1) Solid fundamentals that have momentum to start 2021.
(2) A healthy financing backdrop.
(3) Potential for policy catalysts, particularly in the US.

At the same time, while we would not argue that solar stocks are cheap in absolute terms, we think it’s noteworthy that the average P/E has compressed by ~7 turns across our solar coverage since the beginning of 2021, while earnings estimates have actually been revised higher by about 8% in aggregate. With this in mind, we continue to see significant upside to Buy-rated names across the group (e.g., ~40% on average).

These four top stocks are rated Buy and are offering outstanding entry points for aggressive growth investors with an eye for value. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Array Technologies

This company sometimes is confused with a biotech with a similar name that Pfizer bought in 2019. Array Technologies Inc. (NASDAQ: ARRY) provides solar tracking solutions and services for utility-scale projects. Its products include DuraTrack HZ v3, a single-axis solar tracking system, and SmarTrack, a machine learning software that automatically adjusts module angles in response to weather and site conditions.

This stock had a red-hot initial public offering last fall. Shares charged out of the gate, as the first trade was 34% above where the upsized IPO was priced. A total of 47.5 million shares were sold in the offering, as the maker of ground-mounting systems used in solar energy projects sold 7 million shares to raise $154 million and a selling shareholder sold 40.5 million shares.

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