Rising Outlook: Solar Sector Spotlight (SING, RUN, NXT, SPWR)

October 18, 2023 at 05:02 AM EDT

In the last decade, the solar industry has witnessed a remarkable ascent, boasting an average annual growth rate of 24%. This meteoric rise can be attributed to robust federal policies such as the solar investment tax credit, a continual drop in costs, and mounting demand for clean energy in both the private and public sectors. With over 155 gigawatts (GW) of solar capacity now in operation nationwide, powering 27 million homes, solar energy has undeniably become a force to be reckoned with.

The United States installed 5.6 gigawatts of capacity in the second quarter of 2023, marking a 20% increase from the same period in 2022. As the industry rebounds from supply chain constraints faced in 2022, it is poised for sustained, strong growth in the years to come, with a projected total of 375 GW by the end of 2028.

Let’s take a look at four companies that could benefit from this increased growth:

SinglePoint Inc. (OTC:SING) appears to be one company that stands to benefit greatly from the expansion in the solar sector. SinglePoint aims to improve quality of life through a vertically integrated solar renewables business and a rapidly growing indoor air quality improvement business. Considering the highly competitive nature of the renewables business, SING’s business strategy is simple and straightforward. The company is focused on acquiring top solar installers (EPC) in each marketplace and vertically integrating offerings through its portfolio.

To date, the company has completed and integrated five acquisitions. SING’s flagship subsidiary, Boston Solar, is a leader in the Massachusetts renewable energy market, having installed more than 5,500 solar energy systems in residential and commercial buildings.

What makes this company particularly unique is that it's improving on the traditional single-ePC model for solar installers in a number of ways. Through strategic M&A, SING consolidates a fragmented solar market and enhances profitability while maintaining a local customer experience. Additionally, its vertical integration allows it to achieve quality control at scale across lead generation, brokerage, and EPC. That’s why it has been consistently recognized as one of the top contractors of the year and managed to bag a partnership with the Boston Red Sox to build a solar system at the MGM Music Hall at Fenway.

Boston Solar couldn’t be better positioned for success in the current market. This is because the cost to install solar has dropped by more than 60% over the last decade, leading to the industry’s expansion into new markets and a surge in the demand for solar systems nationwide, which bodes well for SING. Government support through subsidies and tax credits has also provided strong tailwinds for the company. For instance, customers can take advantage of a $600 tax credit through the Inflation Reduction Act, in addition to the existing 30% solar tax credit.

Thanks to these factors, SinglePoint Inc. (OTCQB:SING) was able to generate 24.7 million in revenue in 2022, up from 17.6 million in 2021, illustrating the company’s future growth potential. As a matter of fact, the company announced record financial results for the second quarter of 2023, with revenue of $8.14 million as compared to $4.5 million in the same period of 2022, which represents an impressive 79% increase over the period. To further illustrate just how significant the opportunity for SING is, consider this: The company nearly doubled its installed capacity from 1317.12 KW in Q4 2021 to 2558.29 KW in Q4 2022.

At the moment, SING is trading at about $0.65 per share with a market cap of just under $5 million. However, this may not be the case for too long considering that it's already generating revenue and has a strong foothold in Massachusetts, one of the fastest-growing solar markets in the US. With only 4% of the 88 million addressable homes in the U.S. having solar and SING expanding to new markets through acquisitions, renewable investors should consider putting this company on their watchlist.

Sunrun (NASDAQ: RUN) is another plyer that also highlights the impressive growth prospects of the solar industry. Sunrun is a company focused on providing residential solar, storage, and energy services. The company recently reported its quarterly earnings, delivering a strong Q2 on key operating and financial metrics. RUN came in above its own guidance for solar energy capacity installed, which stood at 296.6 megawatts. For the third quarter of the year, management expects solar energy capacity installed growth to be in the range of 255 to 275 megawatts. The company also added 39,755 customers, including 32,389 subscriber additions, representing 20% growth in the second quarter of 2023 compared to the second quarter of 2022.

Nextracker (NASDAQ: NXT) is the world's largest manufacturer of solar trackers, the racks that enable solar panels to pivot and follow the sun. It also sells software that allows the trackers to maximize output from solar arrays. The company went public earlier this year, raising $638 million, making it the most valuable IPO in the first quarter of this year, according to Renaissance Capital. A report from Wood Mackenzie in July said Nextracker maintained the top spot for solar tracker market share, with 24%, as management raised the company's outlook for the current quarter. Analysts polled by FactSet estimate that the company will grow sales by 16% to about $544 million in the third quarter.

SunPower Corp. (NASDAQ: SPWR) engages in the design, manufacture, and delivery of solar panels and systems. The company provides fully integrated solar, storage, and home energy solutions. Sales came in strong for the second quarter, growing 9% to $461 million easily despite falling short of analysts expectations. The company reported adding 20,400 new customers, representing a 3% increase year-over-year. Most importantly, the company’s new home business secured a record $108 million in bookings in the second quarter, representing 11% growth year-over-year. SunPower’s overall retrofit backlog now stands at 20,000 retrofit customers (revamping existing solar capabilities to keep up with new regulations), with another 39,000 in the new home channel.

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Rising Outlook: Solar Sector Spotlight (SING, RUN, NXT, SPWR)

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