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The Nasdaq Is Plunging, But These 2 Stocks Are Positively Glowing

By Dan Caplinger - Oct 28, 2020 at 11:23AM

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COVID-19 concerns didn't hold every stock back on Wednesday.

COVID-19 case counts have been on the rise both in the U.S. and in many areas of the world, and after having shrugged off the potential economic impact, market participants finally decided on Wednesday that they'd had enough. Market benchmarks plunged to begin the day, and the Nasdaq Composite ( ^IXIC ) was among the hardest hit of the popular indexes. As of just after 10:30 a.m. EDT, the Nasdaq was down 3%.

There's a lot of uncertainty about what the future will bring, both in the health front and with the presidential election just days away. However, one thing you can be certain about is when companies report their financial results. Today, two key stocks in the solar power industry gave their latest updates on their prospects, and shareholders in First Solar ( FSLR 0.88% ) and Enphase Energy ( ENPH -1.92% ) were pleased with what they learned.

First Solar gets its day in the sun

Shares of First Solar climbed 12% on Wednesday morning, defying the market downturn. The solar giant enjoyed amazing growth during the third quarter of 2020, which was especially noteworthy in such a challenging environment for the broader economy.

First Solar's revenue soared to $928 million. That was up nearly 70% from year-ago levels and higher by 44% just since the quarter ended in June. Net income jumped fivefold year over year to $155 million.

Sun rising over mountains, with solar panels in foreground.

Image source: Getty Images.

First Solar explained that international project sales and third-party solar module transactions were instrumental in producing the outstanding results. In particular, sales related to three key solar projects in Japan were a big success, as were efforts to boost the gross margin for its solar modules.

After having withdrawn guidance early in the year, First Solar offered some thoughts about how the fourth quarter is likely to go. The range on revenue was so large as to be essentially worthless, but calls to earn another $1 to $1.50 per share strongly suggest that First Solar believes that the wind is at its back. That was enough to send the stock price to its best levels in nearly a decade and shows the strength of the solar industry right now.

Enphase keeps shining

Enphase Energy also got a nice boost Wednesday, with its stock climbing 7%. The maker of microinverters to manage the electricity produced by solar panels wasn't quite as successful as First Solar, but it still managed a big bounce from weak conditions earlier in the year.

Enphase's revenue was down less than 1% from year-ago levels. Nevertheless, sales were a vast improvement from three months ago, springing back upward by 42% in the past three months. Moreover, earnings were strong, with adjusted net income posting a 6% rise year over year.

Enphase shipped more than 1.44 million microinverters during the period, working out to 478 megawatts. The company reported record gross margin levels, showing the effectiveness of efforts to boost internal efficiency in production.

Moreover, the company is getting a good boost from its new Encharge energy storage system, which enables those who don't have ties into the power grid to save production during daylight hours for use at night.

Guidance for the fourth quarter was also solid, with an anticipated sequential increase from third-quarter levels. That made shareholders optimistic, and it's likely to keep Enphase stock looking healthy for the foreseeable future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

First Solar, Inc. Stock Quote
First Solar, Inc.
FSLR
$99.11 (0.88%) $0.86
Enphase Energy, Inc. Stock Quote
Enphase Energy, Inc.
ENPH
$212.94 (-1.92%) $-4.16
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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