Despite legislative headwinds threatening renewable energy incentives, these fundamentally strong solar companies offer compelling opportunities for short-term stability and potential upside.

Key takeaways:

• Solar stocks crashed up to 27% following Senate Republicans’ proposal to eliminate key tax incentives by 2028
• Market reaction appears to be an overreaction, creating attractive entry points for quality companies
• Three solar stocks stand out for their strong fundamentals and resilience: FSLR, NXT, and JKS

On Tuesday June 17, 2025 the solar sector was crushed by the U.S. Senate’s tax bill which maintained the complete phase-out of all renewable energy incentives by 2028. Several large solar companies experienced catastrophic losses ranging from 12% to 27% in a single day, filling every trader’s data feed to the brim. 

However, that intense selloff may present a buying opportunity for investors that know how to look beyond the headlines. Although policy uncertainty can be difficult for companies to navigate, the fundamentals of the global solar industry are intact and several companies are poised to thrive amid the challenges and storm brewing in the new environment.

The case for contrarian positioning

Our thesis centers on three key observations:

1. Regulations and regimes change: Policy environments are cyclical, and today’s headwinds may become tomorrow’s tailwinds
2. Market overreaction: The indiscriminate selling has created valuation anomalies in fundamentally sound companies
3. Operational resilience: Companies with strong balance sheets and diversified operations can navigate short-term challenges while positioning for recovery

Three solar stocks built for stability

1. First Solar — $143.67

First Solar FSLR emerges as the most compelling pick for investors seeking stability in turbulent times. With a market capitalization of $15.38 billion, FSLR represents the scale and operational breadth necessary to withstand policy shocks.

Key strengths:

• Analyst confidence: Maintains strong “buy” rating with 1-year price target of $202.28 (+41% upside)
• Market leadership: Largest pure-play solar manufacturer with established global presence
• Technology differentiation: Thin-film technology provides competitive advantages in certain applications

Despite the recent 18.48% YTD decline, First Solar’s fundamental position remains robust. The company’s diversified revenue streams and international exposure provide natural hedges against U.S. policy changes.

2. Nextracker (NXT) — $58.90

Nextracker NXT offers a more specialized lens on solar exposure in that it is focused on some type of tracking system, as opposed to direct panel manufacturing. This niche position could be advantageous during times when policy is uncertain.

Key strengths:

• Strategic focus: Solar tracking systems represent a critical but specialized component of utility-scale projects
• Growth trajectory: Recent board expansion signals continued strategic development
• Valuation appeal: Trading near analyst targets ($60.98), suggesting limited downside risk

With a market cap of $8.68 billion, NXT offers the ideal combination of scale and agility. The company’s +61.24% YTD performance (before recent declines) demonstrates underlying business momentum that policy headwinds haven’t fundamentally altered.

3. JinkoSolar — $19.93

JinkoSolar JKS represents the most compelling value play in our coverage, trading at severely depressed valuations that appear to discount a worst-case scenario.

Key strengths:

• Exceptional value: Trading at 0.09 Price/Sales and 0.40 Price/Book ratios
• Significant upside: Analyst average target of $31.16 implies 56% potential appreciation
• Global diversification: International operations reduce dependence on U.S. policy environment

Operational agility: Smaller scale enables faster strategic pivots and market adaptation

The recent 19.93% decline appears overdone relative to the company’s global market position and operational capabilities. For investors with higher risk tolerance, JKS offers asymmetric upside potential.

Risk considerations and outlook

While we believe the market has overreacted, investors must acknowledge that policy uncertainty creates genuine headwinds. The proposed elimination of tax incentives by 2028 will impact project economics and financing availability across the sector. For those navigating such volatility, having a clear framework for managing downside risk is increasingly essential.

The -13.22% YTD performance of the solar industry versus the S&P 500’s +1.25% gain reflects ongoing structural headwinds apart from the short-term policy changes that have received significant media attention. Continued supply chain constraints, margin constraints, and competitive dynamics have substantially impacted the sector’s performance.

Companies with significant international exposure may prove more resilient. Global solar demand continues growing, driven by cost competitiveness and climate commitments outside the U.S. market.

Investment strategy

For investors seeking short-term stability in the solar sector:

• FSLR offers the most defensive characteristics with established market position
• NXT provides exposure to specialized solar infrastructure with growth potential
• JKS represents a higher-risk, higher-reward opportunity for value-oriented investors

Taking sector volatility into account, position sizes should vary based on one’s risk appetite. A fundamentally conservative investor may be comfortable focusing on FSLR, while more aggressive portfolios might have higher weighting in JKS primarily to benefit from the opportunity of value being restored.

Key catalysts to monitor include:

• Congressional action on the tax bill timeline
• Q2 earnings results and guidance updates
• International market developments and policy support
• Technological advancement announcements

Disclaimer: This analysis is for informational purposes only and should not be considered personalized investment advice. Past performance does not guarantee future results. Please consult with a qualified financial advisor before making investment decisions.

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