Goldman remains bullish on solar stocks after a big year but has some new picks for 2021

Solar panels above a Brooklyn neighborhood overlooking Manhattan.
Jeff Morganteen | CNBC

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Solar stocks and renewable energy companies had a record 2020, and Goldman sees more gains ahead as solar becomes increasingly popular.

"We remain positive on solar equities heading into 2021 given ongoing secular growth amidst renewed policy support and attractive financing conditions, while leverage to emerging high-growth verticals like battery storage adds scarcity value to certain pockets of the group as well," the firm said in a recent note to clients.

While Goldman remains bullish on solar broadly, the firm noted that within the space investors should favor specific areas of the market — namely companies focused on residential installation.

The firm adjusted its stock recommendations, including upgrading Enphase Energy to a buy rating. The microinverter company, which is set to join the S&P 500 before trading begins on Thursday, gained an eye-popping 571% in 2020. Still, Goldman sees shares advancing another 34% to $232 over the next 12 months. On the flip side, the firm double downgraded shares of First Solar from buy to sell.

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