- Iranian Warships Enter the Mediterranean Sea: Reports
- Greek Cabinet Agrees to Debt-Swap Plan
- China Cuts Bank Reserve Requirements to Help Lending
- Gas Prices Are the Highest Ever for This Time of Year
- Market Outlook: Everyone Is Waiting for a Stock Pullback
- Coolest Toys from Toy Fair
- Coinstar Teams Up With Starbucks for Coffee Kiosks
- Priceless: University Offers Competition for Free Tuition
- Payroll-Tax Cut May Be Offset by Rising Gas Prices
- Microsoft Could Close Gap Against Apple: Analyst
- Fewer Foreclosures Could Mean Lower Home Prices
- DreamWorks Animation Partners with China on Movie Venture
- Twitter Grows Up and Grows Revenue: Interview with CEO Dick Costolo
- Unconventional Leadership Lessons from Jeremy Lin
- Berkshire’s New Duo Behind Picks
- Nevada Approves Rules for Self-Driving Cars
- Gilead Still a ‘Buy,’ Despite Hep C Results: Analyst
- Can Apple Investors Sue for a Dividend?
MOST SHARED
- Thinking Outside the Redbox
- China Agrees to Open Its Market to More US Movies
- Drones Set Sights on US Skies
- China Cuts Banks' Reserve Requirement Ratios
- Too Good to Be True: Self-Employment Scams
- Fear Factor Decreases for Cloud Computing Services
- In Trial, Hep C Patients Saw Viral Relapse: Gilead
- Twitter Expands Ad Business, Partners with AmEx Small Business
- Ghost Towns Haunt Spain Amid Real Estate Crash
- Nevada Approves Rules for Self-Driving Cars
MOST POPULAR
HOT ON FACEBOOK
Solar Emerges From A Dark Period
Text Size 
Special to CNBC.com
The outlook for the solar industry might not be glowing, but its a lot brighter than it was a year ago when financing and demand dried up, abruptly ending what some might consider a golden age.
So, if you want a little exposure to the sun, here’s a snapshot of the sector and what’s hot.
 |
Getty Images A worker cleans solar panels at a solar photovoltaic power station under construction in Xining of Qinghai Province, China. |
Supply-Demand Dynamic
The good news, says Collins Stewart analyst Dan Reis, is that the demand for solar modules, a unit of interconnected solar cells, right now is very high.
“Most of the industry is sold out,” he says. That's particularly true of Germany, which represents about 36 percent of worldwide demand. Demand is also up in France, Italy and the U.S., while the new Japanese government is expected to increase subsidies.
In that context, Reis rates Trina Solar [TSL
Loading...
()
], Yingli Green Energy [YGE
Loading...
()
] and Canadian Solar [CSIQ
Loading...
()
] as buys.
On the supply side, the shortage of polysilicon, the building block for solar panels, is a thing of the past.
“Large polysilicon makers have been expanding capacity and it all came on line in the middle of last year,” says Kaufman Bros. green tech analyst Theo O'Neill.
So much so that massive oversupply is expected over the next three years. At the same time, however, the dramatic drop in the cost of producing solar panels will make it more competitive with other forms of energy.
Ultimately, this will be good for industry growth because more people will be able to afford solar, but will likely hurt some module companies in the near term.
Sectors And Players
As panel prices fall, consumers will eventually start to buy and it will be good for the companies that install solar panels like Akeena Solar [AKNS
Loading...
()
], Real Goods Solar [RSOL
Loading...
()
], Premier Power [PPRW
Loading...
()
] and Phoenix Solar.
“There is no reduction in how much it costs to install solar on your roof, says O’Neill.
Gordon Johnson, who heads alternative energy research at Hapoalim Securities, says the price collapse in modules will help another part of the solar food chain.
“You want to buy the guys who benefit from lower pricing like the guys selling equipment to the Asian module manufacturers who are aggressively expanding capacity. Those guys are set for massive gains,” he says.
He says equipment from companies like Centrotherm [CTM
Loading...
()
] and Amtech Systems [ASYS
Loading...
()
] is currently in high demand.
Another indication that solar is an industry that will grow, is the big name players who are getting involved.
- Dipping Into Green Investing
- A Guide To Green Mutual Funds And ETFs
- Technology The Wild Card In Green Sector
- Sustainability Indices Sprouting Up
- Solar Emerges From A Dark Period
- US May Wind Up Green With Envy
- Finding Value and Growth In The Green Sector
- Money Pouring Into Water Industry
- For Investors, The New Green Looks To Be White
General Electric [GE
Loading...
()
] (the parent company of CNBC) has a noteworthy start-up in Colorado called PrimeStar Solar.
“They have ordered production equipment so I am expecting that they are going to become a force in the industry at some point,” says O’Neill.
At the same time, analysts expect consolidation as some of the smaller inefficient players are absorbed or exit their business.
Investing Options
The solar industry may be young, but it's diverse, dynamic and competitve enough to make stock picking a perilous exercide. For that reason, some experts suggest ETFs as an entry point for retail investors because of their broad diversification.
“I would surely use an ETF because sometimes it doesn’t matter how good the numbers look or how you think the company is managed," says the editor of ETF Trends, Tom Lydon. "It doesn’t always translate into company A outperforming company B.”
Lydon suggests using a trend-following strategy.
“By having a buy and sell discipline, I use the 200-day moving average, it can help keep you during potential long-term up trends and have you out before you lose too much,” he explains.
He cites Claymore MAC Global Solar Energy Index ETF [TAN
Loading...
()
] and Van Eck's Market Vectors - Solar Energy ETF [KWT
Loading...
()
] as two choices.
Reis, on the other hand, doesn’t like solar ETFs because they tend to be weighted toward large companies.
Continental Drift
Though there's a lot of talk about developing nations struggling to implement sustainability practices, they seem to be doing fine in embracing the alternative energy business model.
One of the most interesting things that is going right now, says O’Neill, is happening at panel manufacturer Evergreen Solar [ESLR
Loading...
()
].
The company just announced that it is disassembling a relatively new Boston-based factory and relocating it to China because it will be a lot cheaper to operate there.
“It’s emblematic of what’s happening in the solar space,” he says, with many companies, such as First Solar [FSLR
Loading...
()
], having operations in Asia.
China, in particular, is putting its money where its mouth is by having a coherent energy policy in place. The U.S., however, doesn't have one, so business is being dismantled and sent to China, says O’Neill.
“I don’t blame Obama for it," he says. "But the longer this goes on without having any kind of climate bill, the more likely it is that the Chinese will continue to eat our lunch.”
- If you think the rally in Treasurys is tired, maybe it’s time for corporate, high-yield and agency debt.
- Under pressure, Apple has moved to quell a swelling controversy over its Apps privacy policy.
- Corporate America may be ready to share a bigger chunk of its record profits with investors.
- A Porsche historian has assembled some of the most coveted sports cars in the world.
- Monday is on your calendar as President’s Day, but to the NYSE, it’s still something else. (By the way, they’re still closed Monday)
- While booming air travel in Asia has led to a rush of aircraft orders, there’s concern over financing.
Data is a real-time snapshot *Data is delayed at least 15 minutes
