Avoid These 2 Solar Stocks That Were Recently Downgraded
StockNews
Published Sep 29, 2021 12:40PM ET
Updated Sep 29, 2021 01:30PM ET
Avoid These 2 Solar Stocks That Were Recently Downgraded
The introduction of the federal solar investment tax credit (ITC) has encouraged many homeowners to install solar panels. As a result, several solar companies have witnessed improvement in sales. However, some players in this space appear to have lost momentum lately due to intense competition and a shortage of critical components. Analysts have recently downgraded Sunrun (NASDAQ:RUN) and JinkoSolar (NYSE:JKS). So, investors are better off avoiding these two stocks for now.Government incentives for installing solar panels to reach net-zero carbon emissions have worked favorably for the solar industry. Moreover, as the solar Investment Tax Credit (ITC) will decrease to a permanent 10% for commercial installers and will completely disappear for home buyers by 2023, companies and homeowners might rush to install solar panels in the near term to benefit from the high ITC now. This could lead to a further surge in sales of solar panels.
The global solar energy market is projected to reach $223.3 billion by 2026, exhibiting a CAGR of 20.5%. While most players in the solar space have been benefiting from the industry tailwinds, some are struggling to stay afloat due to intense competition. Moreover, supply constraints of solar equipment components like polysilicon, copper, semiconductor chips, and other metals are marrying their growth.
Given this backdrop, it could be wise to avoid solar stocks possessing weak fundamentals and poor growth prospects. Because of fragile financial health, Sunrun Inc . (RUN) and JinkoSolar Holding Co., Ltd. (JKS) have been recently downgraded by analysts. Therefore, these two stocks are best avoided now.
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