With President Biden declaring a ban on Russian oil and gas imports and the U.K. announcing a similar measure, an existing energy supply crunch might worsen further, increasing energy prices. This paves the way for a potential upturn by the solar industry. Investors’ interest in this sector is evident in the Invesco Solar ETF’s (TAN) 15% returns over the past month.
Furthermore, the industry is expected to achieve solid growth with the rising focus on sustainable energy to address climate change concerns. Supportive federal policies are also predicted to drive the industry’s momentum.
Therefore, we think the stocks of solar energy concerns Shoals Technologies Group, Inc. (SHLS) and FTC Solar, Inc. (FTCI), which have declined more than 25% in price year-to-date, could be good additions to one’s watchlist now. Wall Street analysts expect them to rally by 25% or more in the near term.
Shoals Technologies Group, Inc. (SHLS)
SHLS provides electrical balance of system (EBOS) solutions for solar energy projects in the United States. The Portland, Tenn.-based company offers EBOS components and sells its products to engineering, procurement, and construction firms that build solar energy projects.
On Jan.5, 2022, Luminace and SHLS announced a strategic agreement to pursue distributed renewable energy generation and EV charging solutions. Jason Whitaker, the CEO of SHLS, said, "We are excited to collaborate with Luminace and join forces to bring our customers an unprecedented level of efficiency in the implementation of solar and eMobility projects. Together we will leverage our innovative technology and Luminace’s operational expertise to accelerate the adoption of renewables and EV charging infrastructure across the U.S.''
SHLS’ revenue came in at $59.84 million for its fiscal third quarter, ended Sept. 30, 2021, up 13.8% year-over-year. The company’s gross profit came in at $21.77 million, up 5.2% year-over-year. Also, its cash and cash equivalents came in at $14.19 million for the period ended Sept.30, 2021, compared to $10.07 million for the period ended Dec. 31, 2020.
For its fiscal year 2022, analysts expect SHLS’ revenue to be $352.12 million, representing a 66.3% year-over-year rise. Also, the company’s EPS is expected to increase 100% to $0.48 in 2022. The stock has lost 33.3% in price year-to-date to close yesterday’s trading session at $16.20. Wall Street analysts expect the stock to hit $30.33 in the near term, which indicates a potential upside of 87.2%.
FTC Solar, Inc. (FTCI)
FTCI provides solar tracker systems, technology, software, and engineering services in the United States, Vietnam, and internationally. It offers two-panel in-portrait single-axis tracker solutions under the Voyager brand name. FTCI is headquartered in Austin, Tex.
On Nov. 10, 2021, Sean Hunkler, FTCI President and CEO, said, “As I cross the six-week mark as CEO, I’m excited by what I have seen so far and by the promising long-term prospects ahead for FTC Solar. We have strong and expanding customer relationships, underscored by our multi-year transaction with a leading project developer for a significant portion of the pipeline being developed by them—a first of its kind transaction for FTC Solar.”
FTCI’s cash came in at $140.66 million for the period ended Sept.30, 2021, compared to $32.36 million for the period ended Dec. 31, 2020. Its total current assets came in at $229.16 million compared to $65.72 million for the same period. Furthermore, its total assets came in at $235.43 million, compared to $71.39 million, also for the same period.
Analysts expect FTCI’s revenue to grow 80% year-over-year to $434.39 million in 2022. Its EPS is expected to grow 95% in 2022. The stock has declined 25.3% year-to-date to close yesterday’s session at $5.65. Wall Street analysts expect the stock to hit $7.20 in the near term, which indicates a potential upside of 27.4%.
SHLS shares were trading at $15.84 per share on Thursday afternoon, down $0.36 (-2.22%). Year-to-date, SHLS has declined -34.81%, versus a -11.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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