Top solar stocks according to WarrenAI

What Happened?

Shares of solar energy systems company Shoals jumped 9.7% in the morning session after it announced the groundbreaking of a major solar and energy storage project in Australia. The company, in partnership with PCL Construction and Gentari, has started work on the Maryvale Solar and Energy Storage Project in New South Wales. This facility is notable for being one of Australia's largest DC-coupled solar and battery energy storage systems. It is expected to deliver approximately 243 MW of solar generation capacity, which will be paired with 172 MW of battery storage. This significant project highlights Shoals' expansion and leadership in providing key electrical systems for the global energy transition market. The positive development was also complemented by recent analyst optimism, with Guggenheim recently raising its price target on the stock from $6.00 to $8.00.

Is now the time to buy Shoals? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Shoals’s shares are extremely volatile and have had 61 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 4 days ago when the stock dropped 6.3% as an unexpectedly sharp rise in wholesale inflation fueled concerns about rising costs and their impact on corporate profits. The primary catalyst was the July 2025 Producer Price Index (PPI), a measure of inflation at the wholesale level, which jumped 0.9% against forecasts of a 0.2% rise. This represents the most significant monthly increase in over three years, pointing to mounting cost pressures for manufacturers, with tariffs cited as a key factor. This data complicates the Federal Reserve's upcoming interest rate decisions, as persistent inflation may prevent rate cuts, creating a headwind for cyclical sectors like Industrials.

Shoals is down 5% since the beginning of the year, and at $5.75 per share, it is trading 11.6% below its 52-week high of $6.50 from September 2024. Investors who bought $1,000 worth of Shoals’s shares at the IPO in January 2021 would now be looking at an investment worth $185.44.

What Happened?

A number of stocks fell in the afternoon session after an unexpectedly sharp rise in wholesale inflation fueled concerns about rising costs and their impact on corporate profits. The primary catalyst was the July 2025 Producer Price Index (PPI), a measure of inflation at the wholesale level, which jumped 0.9% against forecasts of a 0.2% rise. This represents the most significant monthly increase in over three years, pointing to mounting cost pressures for manufacturers, with tariffs cited as a key factor. This data complicates the Federal Reserve's upcoming interest rate decisions, as persistent inflation may prevent rate cuts, creating a headwind for cyclical sectors like Industrials.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Renewable Energy company Shoals fell 6.3%. Is now the time to buy Shoals? Access our full analysis report here, it’s free.
• Renewable Energy company Fluence Energy fell 4.2%. Is now the time to buy Fluence Energy? Access our full analysis report here, it’s free.
• Automobile Manufacturing company Lucid fell 4.1%. Is now the time to buy Lucid? Access our full analysis report here, it’s free.
• Aerospace company Redwire fell 4.5%. Is now the time to buy Redwire? Access our full analysis report here, it’s free.
• Aerospace company Ducommun fell 4.6%. Is now the time to buy Ducommun? Access our full analysis report here, it’s free.

Zooming In On Shoals (SHLS)

Shoals’s shares are extremely volatile and have had 59 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 2 days ago when the stock gained 5.9% on the news that an in-line inflation report fueled hopes for interest rate cuts and the U.S. and China agreed to extend their tariff truce. The Consumer Price Index (CPI), a key measure of inflation, came in largely as expected, holding steady at 2.7% year-over-year. This reading boosted investor optimism that the Federal Reserve will have room to lower interest rates at its next meeting, which could reduce borrowing costs for companies and consumers. Adding to the positive sentiment, the U.S. and China extended their tariff truce for another 90 days. This development alleviates concerns about renewed trade tensions, which is a significant relief for industrial companies reliant on global supply chains and international sales. Together, these events create a favorable outlook for economic growth, benefiting cyclical sectors like industrials.

Shoals is down 24% since the beginning of the year, and at $4.60 per share, it is trading 29.2% below its 52-week high of $6.50 from September 2024. Investors who bought $1,000 worth of Shoals’s shares at the IPO in January 2021 would now be looking at an investment worth $148.48.

Solar energy systems company Shoals beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 11.7% year on year to $110.8 million. On top of that, next quarter’s revenue guidance ($130 million at the midpoint) was surprisingly good and 7.8% above what analysts were expecting. Its non-GAAP profit of $0.10 per share was 19.3% above analysts’ consensus estimates.

Is now the time to buy SHLS? Find out in our full research report (it’s free).

Shoals (SHLS) Q2 CY2025 Highlights:

• Revenue: $110.8 million vs analyst estimates of $104.3 million (11.7% year-on-year growth, 6.3% beat)
• Adjusted EPS: $0.10 vs analyst estimates of $0.08 (19.3% beat)
• Adjusted EBITDA: $24.47 million vs analyst estimates of $23.93 million (22.1% margin, 2.3% beat)
• The company lifted its revenue guidance for the full year to $460 million at the midpoint from $430 million, a 7% increase
• EBITDA guidance for the full year is $107.5 million at the midpoint, above analyst estimates of $106 million
• Operating Margin: 14.4%, down from 18.7% in the same quarter last year
• Backlog: $671.3 million at quarter end, up 4.5% year on year
• Market Capitalization: $773.2 million

StockStory’s Take

Shoals delivered revenue growth in Q2, surpassing Wall Street’s expectations, but the market reacted negatively, with shares dropping sharply after the report. Management pointed to higher domestic project volume and strong bookings as key drivers, yet acknowledged margin pressure from strategic pricing actions and an evolving product mix. CEO Brandon Moss emphasized the impact of competitive pricing and ongoing legal expenses as near-term headwinds, noting, “Gross profit percentage was in line with expectations of mid- to upper 30s, driven largely by strategic pricing initiatives and product mix.”

Looking ahead, Shoals raised its full-year revenue guidance and highlighted a robust backlog, signaling expectations for continued growth into 2026. Management cited accelerating international opportunities, new product adoption, and rising demand from battery energy storage and data center projects as future growth drivers. However, CFO Dominic Bardos cautioned that elevated costs related to warranty remediation and facility consolidation will persist, stating, “Operating cash flow had more challenges, but as we get towards the end of the year, we'll be seeing the reductions of CapEx for 2026 and also warranty remediation.”

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to strong order momentum, expansion into new growth channels, and a diversified customer mix.

• Order momentum and backlog: Bookings continued at a high pace, resulting in a record backlog and awarded orders, which management believes underpins growth well into 2026.
• Expansion into new channels: Shoals saw year-over-year revenue contributions from strategic growth initiatives, including community, commercial, and industrial (CC&I) segments and original equipment manufacturer (OEM) partnerships, both of which are expanding the company’s addressable market.
• Product mix shifts: Management noted a greater share of lower-margin products and promotional pricing to attract new customers, which weighed on overall margins but was described as necessary to win market share from competitors.
• Legal and remediation costs: Elevated legal expenses related to ongoing intellectual property litigation, as well as continued costs for warranty remediation on defective wire, affected operating expenses and cash flow in the quarter.
• International and BESS growth: The company highlighted early wins in international markets and battery energy storage systems (BESS), with CEO Brandon Moss pointing to a pipeline exceeding 20 gigawatts and growing engagement with data center and AI-related projects.

Drivers of Future Performance

Shoals’ updated guidance is driven by expectations for continued demand in utility-scale solar, growing traction in international and energy storage markets, and ongoing operational efficiency initiatives.

• Utility-scale solar and project pipeline: Management believes strong demand for utility-scale solar will continue as energy needs rise, with a majority of backlog scheduled for delivery over the next four quarters and minimal project delays compared to prior years.
• Diversification and new market entry: The company expects increasing contributions from international sales, CC&I, and OEM channels; early-stage wins in Latin America and Australia are seen as indicators of accelerating growth outside the core U.S. market.
• Margin and cost headwinds: While revenue growth is expected, management warned that promotional pricing and a mix of lower-margin products will continue to pressure profitability in the near term, with further impact from legal and remediation costs until these issues are resolved.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be tracking (1) the pace of backlog conversion into revenue, as well as any signs of project delays; (2) execution of operational improvements tied to the new consolidated facility in Tennessee; and (3) the scale and profitability of international and BESS opportunities as they move from pipeline to revenue. The resolution of legal and warranty expenses will also remain in focus as indicators of improved margin potential.

Shoals currently trades at $4.62, down from $5.37 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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What Happened?

A number of stocks jumped in the morning session after an in-line inflation report fueled hopes for interest rate cuts and the U.S. and China agreed to extend their tariff truce. The Consumer Price Index (CPI), a key measure of inflation, came in largely as expected, holding steady at 2.7% year-over-year. This reading boosted investor optimism that the Federal Reserve will have room to lower interest rates at its next meeting, which could reduce borrowing costs for companies and consumers.

Adding to the positive sentiment, the U.S. and China extended their tariff truce for another 90 days. This development alleviates concerns about renewed trade tensions, which is a significant relief for industrial companies reliant on global supply chains and international sales. Together, these events create a favorable outlook for economic growth, benefiting cyclical sectors like industrials.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Electronic Components company Allient jumped 4.3%. Is now the time to buy Allient? Access our full analysis report here, it’s free.
• Renewable Energy company Array jumped 3.2%. Is now the time to buy Array? Access our full analysis report here, it’s free.
• Renewable Energy company Shoals jumped 5.9%. Is now the time to buy Shoals? Access our full analysis report here, it’s free.
• Home Construction Materials company Quanex jumped 4.8%. Is now the time to buy Quanex? Access our full analysis report here, it’s free.
• Professional Tools and Equipment company Middleby jumped 4%. Is now the time to buy Middleby? Access our full analysis report here, it’s free.

Zooming In On Shoals (SHLS)

Shoals’s shares are extremely volatile and have had 59 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock gained 5.7% on the news that it received a key analyst upgrade from Roth/MKM following a strong second-quarter earnings report. The investment firm lifted its rating on the stock to 'Buy' from 'Neutral' and doubled its price target to $10.00. The upgrade followed Shoals’ announcement that its second-quarter revenue jumped 11.7% from the prior year to $110.8 million, while its earnings per share of $0.10 surpassed analyst forecasts. Bolstered by the results, Shoals also increased its full-year revenue guidance, pointing to a record order backlog which signaled robust demand for its solar energy products.

Shoals is down 22% since the beginning of the year, and at $4.72 per share, it is trading 27.4% below its 52-week high of $6.50 from September 2024. Investors who bought $1,000 worth of Shoals’s shares at the IPO in January 2021 would now be looking at an investment worth $152.23.