Best Solar Stocks

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Renewable energy has become a major theme for forward-looking investors and several different niches within the energy sector are looking to enhance it. Water, wind and solar power are the biggest potential sources, all with their various pros and cons. But solar power is front and center in the renewable energy market thanks to the companies producing it and the numerous ways it can be leveraged by consumers. Of course, saving the world takes time and investors aren’t known to be patient. Today, we’ll look at 5 solar stocks that could make waves in 2022.

Quick Look at the Best Solar Stocks:

• Sunlight Financial Holdings Inc
• SunPower
• Brookfield Renewable
• First Solar
• JinkoSolar
• SunHydrogen Inc

Overview: Solar Stocks

Solar power is a clean and potentially limitless energy source and many companies have attempted to harness it. Solar power isn’t a single technology, either.  Energy from the sun is turned into power through 3 different methods:

• Photovoltaics
• Solar heating and cooling (SHC) 
• Concentrating solar power (CSP)

When discussing solar energy, most people are talking about photovoltaic solar systems, which convert sunlight into energy through the semiconductors lining the inside of solar panels. Concentrating solar power and solar heating and cooling systems actually use the sun’s thermal energy to create power. CSP and SHC systems are often implemented to heat public pools or provide hot water to residences.

Despite the potential, problems still exist when it comes to implementing solar energy systems. The sun could reliably rise and set at specific times, but weather is about as trustworthy as the Smoking Man from the X-Files. A long period of inclement weather could wreak havoc on solar energy systems and storage systems are a must for any solar energy application. Daylight hours need to count for solar systems to reach max efficiency and weather often just does not want to cooperate.

Then there’s the cost. For the average homeowner, installing a solar energy system will cost around $14,000 to get up and running and that’s after factoring in the federal tax credit. While the long-term energy savings could make this a worthy investment, most homeowners simply don’t have $14,000 in the budget to switch to a new electricity source. Some states have offered incentives, and there are companies that finance these installations without changing the user’s energy bills, but financing requires a high credit score and pre-approval from the lender used by the installer.

Best Online Brokers for Solar Stocks

Before investing in solar energy companies, you’ll need a broker to supply you with shares. If you don’t have a broker, you’re in luck — there’s never been a better time to open an account. Almost all major brokerages have erased commissions on stock and ETF trading, plus many offer sign-up bonuses like deposit matching or free stocks. 

Your experience level will determine which broker is best. If you want to trade based on technical analysis and buy/sell signals, you won’t want a broker that only offers basic line charts. And of course, be sure your broker has shares of the solar companies you wish to invest in.

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Best For

Active and Global Traders

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get started securely through Interactive Brokers’s website

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Best For

Active and Global Traders

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Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 150 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.  

IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

Best For

• Access to international markets
• Active traders
• Detailed mobile app that makes trading simple
• Wide range of available account types and tradeable assets

Pros

• IB SmartRouting provides significant price improvement vs. industry
• Fractional trading allows investing regardless of share price
• Industry’s lowest margin rates
• Earn more by lending your fuly-paid shares

Cons

• Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources

Best For

Leveraged Trading

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get started securely through Plus500’s website

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Disclosure: 82% of retail accounts lose money

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Leveraged Trading

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82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Plus500 is an online CFD broker focusing on contracts for difference (CFDs). CFDs are similar to binary options in the U.S. where traders take all-or-nothing speculation on the prices of certain securities like indices, commodities or currencies. While not legal to trade in the U.S., CFDs are legal in many jurisdictions across the globe and Plus500 offers a wide array of tradable markets using these instruments. 

Plus500 doesn’t charge commission and only profits off the spread, which is the difference between the buy and sell price of a specific security. But Plus500 is not a broker for beginners — the education materials are sparse and CFDs are risky derivatives capable of sapping out all of an investor’s capital. Only trade these instruments if you understand how they operate and the risks involved with buying them.

Best For

• Traders looking for a smooth mobile experience

Pros

• Great mobile app
• Low spreads and commissions
• Unlimited demo account

Cons

• Only derivatives are available
• Not open to U.S. residents

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Trading Ideas

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get started securely through public.com’s website

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Trading Ideas

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Public is the only investing platform that lets you trade stocks, ETFs, crypto, bonds, options and alternative assets—like fine art and collectibles—all in one place. Public also provides access to custom company metrics, live shows about the markets, and insights from a community of millions of investors, creators, and analysts.

Today, Public provides more ways to create a diversified portfolio than nearly any other online broker. Members can engage in sophisticated investing strategies and access a wealth of investing insights—from company-specific analysis to live audio shows and town hall-style Q&As. In addition, Public offers a premium membership tier with unique company KPIs, detailed performance metrics, and institutional-grade research. 

 

Best For

• Stock and ETF investors
• Crypto investors
• Investors looking to diversify with alternative assets or bonds and options

Pros

• Commission-free stock and ETF trading
• Fractional share investing
• Advanced data, tools, and insights with Public Premium

Cons

• You can’t transfer crypto to another wallet
• No mutual funds or precious metals
• At this time, only offers individual brokerage accounts and not IRAs

Best For

Commission-Free Mobile Trading

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get started securely through Robinhood’s website

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Commission-Free Mobile Trading

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Robinhood is a popular trading platform known for its commission-free trades and user-friendly mobile app. Ideal for novice investors, Robinhood makes it easy to buy and sell stocks, ETFs and cryptocurrencies. The platform offers a straightforward, no-frills experience, making it accessible for users new to investing. With features like fractional shares and a sleek interface, Robinhood lowers the barriers to entry for investing, allowing users to start with just a few dollars. It lacks the advanced tools and research options that more experienced investors might seek. Overall, Robinhood is a great choice for beginners seeking a simple way to invest.

Best For

• Beginners looking for simplicity
• Mobile-first investors
• Commission-free trades

Pros

• User-friendly mobile app
• Instant double
• Cash management
• Access to cryptocurrencies

Cons

• Limited research tools
• No mutual funds available
• Basic customer support options

Best For

Active Short Sellers

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get started securely through TradeZero’s website

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Best For

Active Short Sellers

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TradeZero is an online broker and free stock trading platform that provides everything you need to successfully share and trade, including round-the-clock customer support. TradeZero provides four different trading state-of-the-art software programs with its services, a locator for sourcing shares for shorting, commission-free trades, and real-time streaming, to name a few of the features promoted on their website. The software is a unique and (potentially) affordable option for anyone interested in stock trading.

Best For

• Traders seeking high transparency and mobility in a stock trading program
• Those attracted to commission-free trades
• Those seeking a free version of a high-quality trading program

Pros

• 24/7 live customer support
• Uses ZeroWeb technology, a powerful level 2 online platform with direct market access
• Mobile app allows users to access stocks and trade in real-time while on the go

Cons

• Enforces Pattern Day Trading restrictions (accounts need to maintain a daily equity balance of at least $25k)
• Mobile app could offer more features

Features to Look for in Solar Stocks

Solar energy stocks haven’t been terrific investments in the last few years. Despite advances in efficiency and promotion from governments around the world, most solar stocks languished behind the S&P 500 during the decade-long bull market. There’s little doubt that solar power will be a big part of our lives in the coming years, but how long will investors be willing to wait to see more prevalent adoption? 

When looking for solar companies to invest in, always keep a few key features in mind.

• Debt levels: Solar energy is expensive. Panels are expensive to make, installations are expensive to perform and storage systems are expensive to maintain. These costs will likely decline in the future as the technology continues to improve, but right now solar energy firms require extensive amounts of capital. Be sure you aren’t investing in a company with an unhealthy debt level.

• Cash flow consistency: Additionally, solar energy companies require a ton of capital to keep operations running smoothly. Much like its peers in the oil and gas business, the equipment needed to manufacture, install and maintain solar systems is costly. Even the solar panels themselves don’t come cheap! To make sure you’re investing in the best solar stocks, keep an eye on their cash flows. Cash flow and debt often go hand-in-hand here.

• Management that believes: If you’re in it for the money, you’re in the wrong sector. Solar energy firms have an uphill battle to climb thanks to a familiar foe — inertia. Fossil fuels remain the dominant source of global energy and replacing them would require massive infrastructure changes. The management team in a solar energy company must have the longest view in the room because adoption will be a slow and arduous process. This is not the industry for corner-cutting just to make a buck.

Where Do Solar Stocks Fit in Your Portfolio?

Solar energy companies are attempting to serve 2 different customer bases at once. On one hand, solar power is a terrific public good that would greatly reduce fossil fuel consumption and make for a healthier environment. On the other hand, solar power systems are expensive to build and maintain and companies in the sector are often riddled with debt. 

When adding solar stocks to your portfolio, be sure to consider the pros and cons of both the individual companies and the industry as a whole. Just because a company is attempting to do good doesn’t mean it’s a well-run firm. Always thoroughly vet solar companies before investing and have a plan for exiting a speculative trade.

The post Best Solar Stocks by Dan Schmidt appeared first on Benzinga. Visit Benzinga to get more great content like this.