The Only 2 Solar Stocks Outperforming the S&P 500 in 2021

The solar industry has exhibited solid progress over the past decade. However, the industry is currently struggling with supply chain bottlenecks and elevated input costs. But despite the industry’s bleak growth prospects, iSun (ISUN) and Sunworks (SUNW) have outperformed the S&P 500 so far this year. As the only two industry participants that have surpassed the market benchmark, we think adding them to one’s watchlist now could be wise. Let’s discuss.

The solar industry is making rapid progress with the rise in installation of residential solar panels worldwide as countries race to achieve their sustainability targets. However, the industry is currently hamstrung by supply chain bottlenecks and a series of trade risks. These constraints have led to a significant rise in prices across every segment, which could mar the industry’s growth.

Despite the industry’s bleak growth prospects, investors’ optimism about green energy initiatives worldwide has led solar stocks iSun, Inc. (ISUN) and Sunworks, Inc. (SUNW) to outperform the broader S&P 500 index year-to-date. 

ISUN and SUNW have gained 44.4% and 23.6% in price, respectively, versus the S&P 500’s 16% returns year-to-date. These are the only solar stocks that outperformed the S&P 500 and thus could be worth adding to one ‘s watchlist now.

iSun, Inc. (ISUN)

ISUN in South Burlington, Vt., is a solar engineering, construction, and procurement contractor for commercial and industrial customers in the Northeastern United States. It also provides electrical contracting services and data and communication services.

On September 8, ISUN signed a definitive agreement pursuant to which a subsidiary of ISUN will acquire SunCommon, a market-leading provider of residential, community, and commercial solar. ISUN expects the differing revenue cycles of the two businesses will improve its cash flow. The acquisition gives ISUN access to SunCommon’s expertise and should aid its strategic expansion in the residential sector.

On August 24, ISUN announced that it had been awarded a portfolio of five projects in the state of New Hampshire. The company estimates that the project portfolio will have a combined contract value exceeding $7.2 million. This reflects the company’s approach to value creation. Moreover, these projects are expected to support ISUN’s target of doubling its revenue in 2021.

For the second quarter, ended June 30, ISUN reported $4.35 million revenue of, representing a 57% increase from the same period last year. Its revenue growth is attributable to the company’s continued execution of its  project backlog, which consists  primarily of projects awarded in previous years. ISUN maintained a strong balance sheet with $20.22 million in cash on hand at quarter-end.

Analysts expect ISUN’s revenues to increase 94.3% year-over-year to $40.91 million in the current year. Also, the company’s revenue is expected to increase 130.1% year-over-year to $94.15 million in the following year. A $0.43 consensus EPS estimate for the next year indicates a 155.8% rise from the current year.

Shares of ISUN have gained 154.9% in price over the past year to close yesterday’s trading session at $8.59.

Sunworks, Inc. (SUNW)

SUNW provides photovoltaic-based power systems for the agricultural, commercial, industrial, public works, and residential markets. In addition, it offers a range of installation services, including system engineering, procurement, grid connection, warranty, system monitoring, and maintenance services to its customers. SUNW is headquartered in Roseville, calif.

On August 26, SUNW announced its agreement with CBG Building Company to provide a 752.4kW carport solar system for a housing project. In June, SUNW signed a deal with the Colusa Unified School District near Sacramento, Calif., to provide a solar system at three schools in the district. The three systems, which provide approximately 555 kWdc of electricity in aggregate, are valued at approximately $2 million. The proceeds from the deployment of its solar systems should allow the company to strengthen its financial position in the coming quarters.

SUNW’s revenues increased 231.9% year-over-year to $32.09 million in its fiscal second quarter, ended June 30. Its gross profit came in at  $15.14 million, up 528.9% from the same period last year.

A $127.40 million consensus revenue estimate  for the current year represents a  236% improvement from the last year. Furthermore, analysts expect the company’s revenue to come in at $139 million in the following year, indicating a 9.1% rise year-over-year. The company’s EPS is expected to increase 28.6% year-over-year in the next year.

Over the past year, the stock has gained 653.6% in price to close yesterday’s trading session at $6.33.

SUNW shares were trading at $6.16 per share on Tuesday afternoon, down $0.17 (-2.69%). Year-to-date, SUNW has gained 20.31%, versus a 17.05% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.


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