5 Best Solar Stocks to buy in September 2021

Green energy which includes solar is among the most promising investing themes for the next decade. Solar stocks surged sharply last year after Joe Biden’s election. The rally continued in 2021 but green energy stocks have been weak over the last six months.

With solar stocks down considerably from their 2021 high, these are the five solar stocks that you can buy in September 2021.

1. Enphase Energy (NYSE: ENPH)

Enphase Energy stock rose over 550% last year and also joined the S&P 500 Index. The stock has gained 2.5% so far in 2021 and is underperforming the S&P 500 by a wide margin. The stock is currently down over 23% from the 52-week highs and is in a bear market territory.

ENPH looks like a good solar stock to buy

Meanwhile, ENPH looks like a good solar stock to buy. Its valuation multiples have also come down after the crash and it now trades at an NTM (next-12 months) PE multiple of 76.5x. The valuations look much more reasonable than they did at the peak. The stock has found strong support at the 200-day SMA (simple moving average) but has been facing resistance at the 200-day SMA which is currently at $177.62 and is only marginally above the current stock price.

If ENPH stock can cross above the 50-day SMA, it would signal technical bullishness. The stock carries a median target price of $202.50 which is a premium of almost 15%. Its street high target price is $238 which is a premium of almost 35%. Of the 28 analysts polled by CNN Business, 18 rate the stock as a buy while nine rate it as a hold. Only one analyst rates this solar stock as a sell.

Overall, Enphase is among the best solar stocks to buy in September. The company’s revenues and profits should soar in the coming years as the US as well as the global economy pivot from fossil fuels to cleaner sources of energy.

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2. Canadian Solar (NYSE: CSIQ)

Canadian Solar is a diversified solar company and is among the best solar stocks to buy in September. Along with producing solar panels it also undertakes solar projects. The company’s revenue mix is geographically diversified and almost half of it comes from Asia while North America accounts for little above a third. Analysts expect the company’s revenues to rise 65% this year. While the growth is arguably coming from a low base, it nonetheless looks encouraging. Next year, analysts expect its revenues to rise 13.2%.

Looking at the valuations, it trades at an NTM PE of 18.75x which looks quite attractive looking at the high valuations of some of the other solar companies. The stock has lost almost 29% this year and is underperforming the markets by a wide margin. The massive crash in the stock looks like a buying opportunity.

The stock currently trades below the 50-day and 200-day SMA. However, its 14-day RSI (relative strength index) of 49 is a neutral indicator.

Analysts on Canadian Solar stock

Of the seven analysts covering Canadian Solar stock, three have a buy rating while four have a hold rating. Its median target price of $51.50 implies an upside potential of 37.6%. The stock’s street-high target price is $57 which is a 52% upside over current prices.

Looking at the tepid valuations and the strong growth outlook, CSIQ looks like a good solar stock to buy now.

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3. First Solar (NYSE: FSLR)

First Solar stock is down 7% so far in 2021 and trades at a discount of 16.4% to its 52-week highs. The stock is among the best solar plays and also has a strong balance sheet. Analysts expect the company’s revenues to rise 8% in 2021 while its EBITDA is expected to jump 34% to $745 million.

FSLR looks like a good solar stock to buy

FSLR stock trades at an NTM PE of 34.5x. The current valuation multiples are the highest that we’ve seen over the last year. Wall Street analysts have a split rating on this solar stock and only eight of the 21 analysts polled by CNN Business rate it as a buy or some equivalent. Eight analysts have a hold rating while the remaining five analysts rate the stock as a sell.

The stock has a median target price of $101.50 which is a premium of 7.8% over current prices. Its highest and lowest target prices are $125 and $57 respectively.

The current valuations for FSLR look a bit stretched, and the stock could correct more from these levels. If the stock dips another 10% from these levels, the valuations would start to appear reasonable.

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4. Tesla (NYSE: TSLA)

When we think of Tesla, we think of it as an automotive company. However, the company also has energy operations and offers solar and energy storage products. Currently, the energy segment contributes less than 10% of Tesla’s revenues, but the company’s CEO Elon Musk believes that the energy segment could eventually become as large as the automotive business.

Looking at what Musk and Tesla have managed to achieve in the EV industry, where the company delivered almost half a million cars in 2020, energy and solar could be the next big thing for Tesla.

To be sure, in 2019, Musk had said that it would be the year of solar for the company. What we got instead were reports of frequent fires at Tesla solar panels including those installed at facilities of Amazon and Walmart.

That said, Tesla is a good way to play multiple themes ranging from autonomous vehicles, electric cars, and solar. While the stock would appear overvalued to valuation purists, they have generally been wrong about Tesla.  While Tesla is not a pure-play solar stock it is a play on the renewable energy theme.

Looking at the technicals, TSLA stock trades above the 50-day and 200-day SMA which is a bullish indicator. The company has a massive fan following, largely due to the charisma of Musk. More than everything, Tesla stock is a bet on the renewable energy vision of Musk.

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5. FTC Solar (NYSE: FTSI)

FTC Solar went public earlier this year and priced the IPO at $13 which was way below the initial price range of $18-$20. The stock went on to hit a high of $15.76 but currently trades below $11. The steep fall in FTSI looks like a good buying opportunity.

The company is not a pure-play solar stock but a niche company. It offers solar tracking systems which it says “significantly increase energy production at solar power installations by dynamically optimizing solar panel orientation to the sun.”

The company is growing fast and analysts expect its revenues to rise 66% this year and 83% next year. The company is currently posting losses but analysts expect it to turn EBITDA positive in 2022 and post an adjusted EBITDA of $56 million in the year.

The stock has an EV of only about $761 million which would mean a 2022 EV-to-EBITDA multiple of just under 14x. The multiples look quite attractive. FTSI stock has been out of favor with investors as they have shunned loss-making growth companies and instead pivoted towards mature and cyclical companies amid fears of a rate hike.

If you are looking at a niche solar play that can be a potential multibagger, FTSI looks among the best solar stocks to buy now.

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