Daily Stock Pick: January 6th, 2023

Stocks popped this morning after the December nonfarm payrolls report showed slowing growth in employment and that wage gains were less than expected. These signs of progress in the Fed’s rate hiking campaign boosted Wall Street sentiment in early trading, but the major indices were still on track to close the first week of 2023 with losses.   

The solar industry had a bumpy 2022 as supply chain disruptions, rising production costs, and labor shortages took the wind out of the sector’s sails. Still, there’s no denying its potential for long-term exponential growth. Today’s recommendation is one of the best-positioned names to benefit from solar’s expansion as governments and corporations around the globe transition to solar energy.  

Over the last decade, solar energy has witnessed an average annual growth rate of 49%. This phenomenal growth is due partly to strong federal policies like the Solar Investment Tax Credit, which currently provides a 26% tax credit on solar investments. This summer the industry caught tailwind gusts from approval of the Inflation Reduction Act, a $430 billion climate bill aimed to reduce the budget deficit via tax reform while investing in renewable energy. 

Arguably one of the best-positioned names to benefit from the Inflation Reduction Act, First Solar Inc. (FSLR) is a leader in the solar industry. Unlike many burgeoning solar companies, they have a rock-solid balance sheet that can handle the challenges of an economic downturn.  

One of the most popular solar stocks to buy, First Solar, provides solar panels and photovoltaic power plants. What sets the company apart from the competition is its ultra-thin semiconductor technology, which provides enhanced resilience and efficiency for its modules.  

There is plenty of upside in the sector and room for growth. Overall, solar energy only accounts for around 2% of the total grid usage. First Solar is preparing for growing demand as that number is primed to increase.  

Wells Fargo analyst Michael Blum recently upgraded First Solar from Equal Weight to Overweight and raised the firm’s price target from $146 to $188, citing an improved regulatory backdrop in 2023 and beyond.