I just published a new thematic portfolio: Solar Energy.

One of the reasons I enjoy doing these sector breakdown is because you’ll always discover new interesting companies.

All of this comes at a time when valuations across the solar industry have pulled back after 4 very challenging years. After a long reset, the sector’s fundamentals are starting to stabilize. Solar is now experiencing a renaissance. Global electricity demand is accelerating again, and a big part of that growth is coming from data centers needed to power AI.

So, here are 3 stocks that stood out.

1. Enlight Renewable Energy ($ENLT)

Enlight builds and operates large clean power projects. Its main focus is utility scale solar and wind farms that feed electricity directly into the grid. These are not rooftop panels, but very large projects designed to supply cities, industries, and data centers.

Enlight works across the full life cycle of a project. It finds suitable land, secures permits, arranges financing, builds the power plants, and then operates them for many years. By owning and running the assets long term, the company earns steady revenue from selling electricity under long term contracts. The company operates internationally. While it started in Israel, it now has projects in Europe and the United States.

Solar and wind are the core of the business, but storage is becoming more important. Enlight also develops large battery systems that store energy from solar and wind and release it later when demand is higher. This makes Enlight a full stack renewable energy company.

It has not only been growing incredibly fast, but it has also been profitable for years.

2. Spruce Power ($SPRU)

Spruce Power is a residential solar company focused on owning and operating home solar systems in the United States. Unlike many solar installers, Spruce usually does not sell systems to homeowners. Instead, it owns the panels and sells the electricity or leases the system to the homeowner. It also uses battery storage and system upgrades where it makes sense.

Spruce Power grows mainly by buying existing residential solar portfolios. These are thousands of already installed home solar systems that come with long term customer contracts. By acquiring these portfolios, Spruce gets immediate cash flow instead of waiting years for new installs to pay back.

The company’s business is built around long term recurring revenue. Homeowners sign contracts that often last 20 to 25 years. Spruce collects monthly payments while handling system monitoring, maintenance, and customer service. This makes the business more stable and predictable than pure installation companies.

Interestingly, since its IPO in 2020, Spruce lost about 99% of its value. Then, starting in August, the stock jumped more than 300%. I am not fully sure what caused that move yet. I need to dig into that. This makes the stock clearly speculative.

What makes it interesting though is its the size. Even after the big run up, the company is still valued at under $100M. That is tiny for an energy company with thousands of operating solar assets. Even more surprising, it is likely generating more than that in revenue this year and is close to being profitable. That gap between revenue and market cap is unusual and worth a closer look.

3. Nextpower ($NXT)

I highlighted Nextpower a few weeks ago, but since it fits this theme so well, it does not hurt to mention it again.

Traditional solar panels are fixed, which limits the amount of sunlight they can capture.

That’s where Nextpower comes in.

They build solar tracking systems with intelligent motors and software that make panels follow the sun throughout the day. Each tracker uses sensors, algorithms, and cloud software to adjust in real time for wind, terrain, and sunlight.

The result is up to 25% more energy output from the same panels.

Until now they’ve deployed systems on more than 90 gigawatts of solar projects across over 30 countries. And Nextpower works with many of the world’s largest renewable energy developers and utilities

They are profitable, growing steadily 20% year after year, and trade at a PE of 24.