What happened
The stocks of many alternative energy companies raced higher in March as investors tried to gauge the effects of rising oil prices and considered share price declines in early 2022 an opportunity to buy. Shares of solar power companies Enphase Energy (ENPH 0.62%), SunPower (SPWR -3.09%), and First Solar (FSLR -1.39%) all shot higher during the month of March. The gains were a respective 21%, 19.8%, and 11.2% for Enphase, SunPower, and First Solar, according to data provided by S&P Global Market Intelligence.
So what
It wasn't just financial results from these companies that drove shares higher in March. Though Enphase and SunPower reported solid fourth-quarter and full-year 2021 earnings results, those reports came in February. First Solar also released strong fourth-quarter 2021 results that improved markedly year over year.
But First Solar's shares plummeted after the March 1 release when the company predicted sharp top- and bottom-line declines for 2022. That's partly because the company will see high manufacturing facility start-up costs in 2022 associated with growth investments. The stock still rewarded shareholders with a double-digit gain for the month, however, as it rode tailwinds that supported the overall solar energy sector.
Image source: Getty Images.
Now what
Uncertainty surrounding global energy continued during March as the war in Ukraine wore on. That helped keep oil prices over $100 per barrel for most of the month, including a peak of more than $120 per barrel. Higher fossil fuel prices typically drive more interest in alternative energy investments, including these solar companies. But it's not just the current situation that has solar stocks higher; it's the potential for increased solar generation capacity to help provide energy independence in the long term.
Business for solar companies had already been growing prior to the recent concern about the future of energy supplies. Enphase reported that its fourth-quarter revenue grew 17% sequentially over its third quarter, and soared 56% compared to the 2020 fourth quarter.
The company has been announcing increasing deployments of its solar and battery storage offerings both domestically and internationally. Enphase also announced an acquisition last month it plans to integrate into its operations to help accelerate the adoption of solar installations. Enphase can afford to grow further through acquisitions, too, as it ended 2021 with $1 billion in cash. It also generated $97.2 million in cash flow from operations in the fourth quarter, while only spending $13.2 million for capital expenditures.
Even with the strong March performance in Enphase's stock, it is only up 12.5% year to date due to the lagging performance earlier in the year. Shares of SunPower are only 2.6% higher for the year, while First Solar stock is down 3.6%. Investors who are looking at solar as a long-term investment decided to take advantage of the early-year drops, driving shares up last month.
