The S&P/TSX Composite Index was up 21 points in early afternoon trading on Wednesday, July 26. Some of the top-performing sectors included battery metals, health care, and industrials. Today, I want to focus on another explosive but under-the-radar market: solar energy.
Vantage Market Research recently valued the global solar power market at US$186 billion in 2022. It projected that this market would achieve a compound annual growth rate (CAGR) of 6.4% from 2022 through to 2030, reaching a market valuation of US$305 billion. Below are three solar stocks that have strong growth potential in the months and years ahead.
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This solar power is undervalued and offers solid income in late July
Northland Power (TSX: NPI) is a Toronto-based independent power producer that develops, builds, owns, and operates clean and green power projects in North America, Europe, and around the world. This company has recently expanded its solar component. Shares of this solar stock have dipped marginally over the past month. The stock has plunged 28% so far in 2023. Investors can see more of its recent performances with the interactive price chart below.
Investors can expect to see Northland’s next batch of results after markets close on Thursday, August 10. This company released its first-quarter (Q1) fiscal 2023 earnings on May 9. Northland Power reported total sales of $622 million — down from $695 million in the previous year. EBITDA stands for earnings before interest, taxes, depreciation, and amortization; this metric aims to give a clearer picture of a company’s profitability. In Q1, Northland delivered adjusted EBITDA of $352 million compared to $420 million in Q1 2022.
Shares of this solar stock currently possess a very favourable price-to-earnings (P/E) ratio of 9.8. Meanwhile, it offers a monthly dividend of $0.10 per share. That represents a solid 4.4% yield.
Don’t sleep on this green energy stock with a strong yield
Algonquin Power & Utilities (TSX: AQN) is an Oakville-based renewable energy and utility company that provides energy and water solutions and services in North America and around the world. Its shares have jumped 1.1% over the past month. This solar stock has climbed 20% in the year-to-date period.
This company unveiled its Q1 fiscal 2023 earnings on May 11. Algonquin delivered revenue growth of 6% to $778 million. Meanwhile, it reported adjusted net earnings of $119 million, or $0.17 per diluted share — down 15% and 19%, respectively, compared to the prior year. However, adjusted EBITDA increased 3% year over year to $341 million.
Algonquin is trading in solid value territory compared to its competitors at the time of this writing. Meanwhile, this solar stock offers a quarterly dividend of $0.108 per share, which represents a strong 5.2% yield.
One more solar stock I’d snatch up today
TransAlta Renewables (TSX: RNW) is the third and final solar stock I’d suggest snatching up in late July. This Calgary-based company owns, develops, and operates renewable and natural gas power-generation facilities and other infrastructure assets in Canada, the United States, and Australia. Shares of this solar stock have climbed 13% so far in 2023.
This company suffered dips in revenue and adjusted EBITDA in Q1 2023. However, TransAlta Renewables is still on track for strong earnings growth going forward. The stock enjoyed a massive uptick after it was announced that it would be acquired by TransAlta for $1.3 billion earlier this month. Regardless, investors can still take advantage of its current momentum and monthly dividend of $0.078 per share in the near term. That represents a terrific 7% yield.
