As 2015 comes to a close, many investors will be taking a fresh look at their portfolios as the new year begins and as they get rid of the losers, reap profits from the winners, increase their holdings in stocks gaining momentum, and in many cases, look to add solid stocks for 2016 that they hope will be considered winners come December next year. Despite a poor performance in 2015, the solar energy sector may be a spot where investors can find the solid stocks they're looking for.
Positive trends have been building up in the space lately, especially after the historic Paris Climate Deal where about 195 countries agreed to curb global warming and greenhouse gas production in the coming years, as well as the U.S. tax credit for solar energy producers being extended for 3 more years. Both happenings along with the depletion of fossil fuels, global warming, and high fuel emission issues have helped the sector perform positively lately, and could lead to solid performances in the New Year as well.
Below are two Zacks buy ranked stocks residing in the Solar Energy industry which Zacks ranks in the top 8% of all industries. These stocks could be solid options for those looking to tap into the renewable energy space as it is poised to have a good year in 2016:
First Solar, Inc. (FSLR)
Based in Tempe, Arizona, First Solar Inc. FSLR manufactures solar modules with an advanced thin film semiconductor process that significantly lowers solar electricity costs. By enabling clean renewable electricity at affordable prices, First Solar provides an economic alternative to peak conventional electricity and the related fossil fuel dependence, greenhouse gas emissions, and peak time grid constraints.
First Solar and its stock have several qualities that should place it on investors' radar. The company is one of the larger solar energy companies around with a market cap that's almost $7 billion. The company owns a B for its value style score from Zacks, as it has solid cash flow per share of $6.15/share, and an earnings yield of 6.58%.
Analysts seem to be becoming more bullish on the stock as 2016 approaches, as there have been 7 upward estimate revisions in the last 60 days, compared to just 2 downward in the same time period. This activity has helped to push the Zacks EPS Consensus Estimate up to 4.31 from 3.93 just 60 days ago.
In terms of performance, First Solar's stock is up nearly 45% year-to-date, and the company has posted earnings beats of 118% and 643% in the last two quarters respectively. All of this coupled with the company holding a Zacks Rank #2 (Buy), and First Solar seems to be quite the option for investment heading into the new year.
JA Solar Holdings LTD (JASO)
Another, even higher ranked stock, is JA Solar Holdings LTD JASO . Based in Shanghai, China, JASO is a fast growing manufacturer of high-performance solar cells that is advancing solar photovoltaics as a finically viable yet sustainable solution to balance the world's environmental and energy needs.
Armed with a Zacks Rank #1 (Strong Buy), JASO is a great potential pick in the solar energy industry. A smaller company than First Solar, with a market cap of 503 million, JASO has a A for its value style score, which can be attributed to a great earnings yield of 16.84%, a relatively low P/E ratio of 5.94, and a solid cash flow per share of $3.49/share.
JA Solar Holdings is up nearly 21% year-to-date, and in just the last two quarters has posted earnings beats of 134.48% and 200% respectively. Positive expectations for the stock can also be seen in analyst activity, as the Zacks EPS Consensus Estimate for this year has been bumped up to 1.61 compared to the estimate of 1.27 just 60 days ago.
Renewable energy sector stocks have not produced the results in 2015 as many would've hoped thanks to oil price collapse and global slowdown concerns, but recent trends have started to build, and 2016 could be a whole different story for the space. The world needs renewable energy for the future, and that future is quickly approaching. The New Year could bring some major gains to stocks in the renewable energy sector and to the solar energy industry, and with the stocks above, investors can position themselves to reap the benefits.