A better future for solar stocks in 2024?

There is a lot of interest in this growing sector, not only from customers but also from investors. I am represented in this area by one of the largest well-known companies, Enphase Energy. However, we have more companies in the market and I was pleasantly surprised by the valuations of some analysts. 😊

Solar stocks have been decimated this year due to high interest rates. Customers have been reluctant to spend on installations and companies' capital projects have become more expensive. A policy change that reduced incentives for solar in California also affected the US industry. The state reduced the subsidy given to rooftop panel owners who send excess energy to the grid.

The benchmark Invesco Solar and Wind Energy ETF $TAN+1.5% is down 36% year-to-date and the Global X Solar ETF ( RAYS ) has lost more than 40% over the same period.

But Wall Street will see a tailwind next year that could help reverse the clean energy sector. One of the tailwinds is the market's expectation of lower interest rates at some point in the year. "If rates fall in 2024 as our economists and strategists predict, we could see a significant improvement in clean energy valuations," Morgan Stanley analysts wrote.

Prices for solar panels, battery storage and inverters, which have risen over the past few years, are also showing signs of deflation.

"We see some evidence to support a more optimistic view (for developers) on the cost trend for these technologies moving into 2024," the note said.

Morgan Stanley analysts took a few stocks for evaluation. First to $FSLR+8.0% where they raised their price target from $214 to $237 per share.

First Solar

FSLR

$212.11 $15.77 +8.03%

Capital Structure

Market Cap

22.7B

Enterpr. Val.

21.4B

Valuation

P/E

22.2

P/S

6.3

Dividends

Yield

-

Payout

-

Open $197.71

Day range $197.71 - $212.37

52 week range $129.22 - $224.50

Next to $NEE+1.4%, they added their price target to $76.

NextEra Energy

NEE

$76.95 $1.08 +1.42%

Capital Structure

Market Cap

158.1B

Enterpr. Val.

235.8B

Valuation

P/E

21.0

P/S

5.8

Dividends

Yield

2.5%

Payout

52.2%

Open $75.87

Day range $75.48 - $76.95

52 week range $47.15 - $77.41

And this company, an unknown to me, $AMPS-0.5%, is valued at $9.

Altus Power, Inc.

AMPS

$3.83 -$0.02 -0.52%

Capital Structure

Market Cap

612.3M

Enterpr. Val.

2.0B

Valuation

P/E

-76.6

P/S

3.7

Dividends

Yield

-

Payout

-

Open $3.83

Day range $3.83 - $4.00

52 week range $3.40 - $7.28

So how do you see this sector in terms of investments and outlook, do you have your favorites here too? 😊