Top solar stocks according to WarrenAI

Investing.com -- Solar energy stocks present a mixed picture of opportunity and risk, according to recent analyses from WarrenAI using Investing Pro’s metrics. While some companies show significant upside potential, others appear to have already reached fair valuation levels.

1. Sunrun (RUN) tops the list as the solar stock with the most dramatic potential upside. Analysts project triple-digit gains of over 100% for this residential solar provider. However, Investing Pro’s Fair Value model suggests the stock is already trading above its intrinsic worth. This contradiction highlights Sunrun’s position as a "story stock" - one where tremendous gains are possible if the optimistic scenario materializes, but with correspondingly high risk if it doesn’t.

In recent developments, Sunrun reported second-quarter revenue of $569.3 million, which surpassed consensus estimates. The company also received several analyst upgrades, including an upgrade to Outperform from RBC Capital, following positive U.S. Treasury guidance for the sector.

2. Shoals Technologies (SHLS) presents a more balanced investment case, with both analyst targets and Investing Pro’s Fair Value model indicating meaningful upside potential. The company, which specializes in electrical balance of system solutions for solar projects, currently trades below both its analyst target price and calculated Fair Value. Its solid Pro Score of 2.41 further strengthens the investment thesis.

Shoals Technologies announced second-quarter 2025 earnings that beat analyst expectations and raised its full-year revenue guidance. Following the strong results, Roth/MKM upgraded the company’s stock to Buy.

3. Enphase (ENPH), a leading manufacturer of microinverters and solar energy solutions, shows moderate upside potential of 28-35% according to both analyst targets and Fair Value assessments. The company is currently slightly undervalued and boasts a strong Pro Score, indicating high financial quality. This combination of reasonable valuation and strong fundamentals places Enphase in a favorable position.

Enphase Energy recently announced a new safe harbor agreement expected to generate approximately $50 million in revenue. The company also launched its 4th-generation Energy System, featuring an improved battery with greater energy density.

4. First Solar (FSLR) earns the highest Pro Score in the group at 2.99, reflecting exceptional financial health. However, Investing Pro’s Fair Value model suggests only modest upside potential from current levels. Analyst targets are more optimistic, likely accounting for recent policy wins and the company’s established leadership position in the thin-film solar manufacturing space.

First Solar reported second-quarter 2025 earnings and revenue that both exceeded analyst forecasts. Additionally, UBS named the company a top pick, citing favorable IRS guidance for the solar industry.

5. SolarEdge (SEDG) rounds out the list with the least favorable outlook. Despite the stock’s performance year-to-date, neither analyst consensus nor Investing Pro metrics indicate significant upside potential from current levels. Both sources suggest caution may be warranted for investors considering this solar inverter and power optimizer manufacturer.

SolarEdge Technologies exceeded top and bottom-line expectations in its second-quarter 2025 results and provided third-quarter guidance that suggested continued growth. Executives also confirmed that inventory levels in distribution channels have stabilized.

The solar sector continues to demonstrate significant variability in valuation and growth prospects, with companies at different stages of maturity and market positioning showing vastly different risk-reward profiles according to WarrenAI’s analysis of Investing Pro data.

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