Solar stocks have burned some short-term investors, but they represent a long-term opportunity for those who expect a successful transition to a clean, sustainable source of electricity for homes and businesses.
When discussing the “big picture” for investors who are interested in solar, Wetzel pointed to NextEra Energy Inc. NEE, +1.10%, which he called “the largest builder or one of the largest builders of solar and wind assets in the U.S.,” and the NextEra Energy Limited Partners LP NEP, +1.06%, which owns solar and wind assets that NextEra Energy Inc. has developed and is designed as an income vehicle, with a current distribution yield of 3.15% on the partnership units.
Those are high expected double-digit growth rates. In comparison, the two-year expected sales CAGR are 5.8% for the S&P 500 SPX, +0.72% and 11.1% for the Nasdaq-100 Index , which is as far out as FactSet’s index estimates go.Rising interest rates can hurt those stocks over short periods.
“Traditionally you have one inverter for an array of panels, but if one panel goes, it reduces the output. Enphase makes a small inverter to sit within each panel,” Wetzel said. This gives the company a technology advantage. Otherwise, it is possible that utility customers generating excess solar power and selling it to the utilities might wind up paying nothing to maintain the electric grid.