Solar stocks have had a rough year. The Global X Solar ETF (NASDAQ:RAYS), which holds about 54 different solar names, has plummeted 42.4% since the beginning of 2023. Solar companies have just not convinced equities traders and investors that they are worth investing in this year, especially as U.S. oil and gas prices have continued to hit new lows.
However, since solar stocks are trading at low valuations, now may be the time to invest for the long term. Below are three solar stocks that could be multibaggers in the maker.
First Solar (FSLR)
While investors have doubts about solar companies in 2023, solar panel manufacturer First Solar (NASDAQ:FSLR) has increased earnings while growing revenue by double-digit percentage points. First Solar also announced a new manufacturing site in the U.S., which would add to its current manufacturing capacity.
Most importantly, First Solar will be pivotal in the broader shift to renewable energy. The company has already generated more than $3 billion in revenue on an LTM basis, and perhaps most importantly, the company is profitable with a 15% net margin over the last 12 months. First Solar currently trades at 13.3x forward earnings. Government support from the Inflation Reduction Act of August 2022 extended the federal investment tax credit (ITC) for solar projects to 26% through 2025. Thus, First Solar could see its top-line growth rate and valuation boosted in the long term.
SolarEdge Technologies (SEDG)
SolarEdge Technologies (NASDAQ:SEDG) is another pure-play solar energy company. However, SolarEdge specializes in providing inverters and “smart energy” power optimizers for solar systems. The company also develops software and hardware solutions for monitoring and controlling solar energy production and consumption. Thanks to a generous policy environment, SolarEdge Technologies has been enjoying strong growth in both residential and commercial segments and in international markets such as Europe and Australia.
Unfortunately, SolarEdge has had mixed earnings and guidance recently. In their Q3 report, revenue came in 13% lower year-over-year. The company attributed this to a lack of demand, particularly in Europe. However, while the demand for solar energy remains challenging, things could improve as the global economy avoids a recession. With this in mind, SolarEdge, which trades at around 21.3x trailing earnings, could be a good investment for long-term holders.
Canadian Solar (CSIQ)
Canadian Solar (NASDAQ:CSIQ) is one of the world’s largest solar module manufacturers and project developers, producing high-quality solar modules for residential, commercial, industrial and utility-scale customers globally. Like the two entries above, Canadian Solar had impressive revenue and earnings growth in the past two years, fueled by a strong global demand for solar energy and projects.
In the first quarter of this year, the solar company beat earnings on an EPS-basis. At that time, Canadian Solar expected total revenues to come between $9.0 and $9.5 billion, up from the previous guidance that had given a wider range of $8.5 to $9.5 billion. Fast forward to their third quarter results; while Canadian Solar missed revenue and EPS estimates, management expects 2024 to be a significant growth year for the company.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.