After what seemed like 5 years of being in the dark, the sun finally shined for solar stocks in 2013. Last year was one of the best 12-month periods for various makers and installers of photovalic panels in terms of shareholder returns. Overall, the broad benchmark for the solar sector — the Guggenheim Solar (TAN) — finished the year with a nearly 120% gain.
Both FSLR stock and SCTY stock had impressive returns in 2013, and with the new year well underway, more gains could be in store for the duo of solar stocks. The question is which is the best solar stock to buy today — FSLR stock or SCTY stock? Both take vastly different approaches to making profits in the solar industry and come with a different set of risks.
With that in mind, let’s take a look at what each of these photovalic superstars has to offer — and see whether FSLR or SCTY stock steals the crown for solar stocks.
FSLR Stock — The Key For First Solar Is Utilities
For thin-film pioneer First Solar, the tale of the tape isn’t just about manufacturing cadmium telluride panels anymore. Sensing and reacting to the glut of cheap PV panels flooding the market from China, FSLR shifted focus to being an “all-around” solar provider. It’s now a completely vertically integrated business that not only manufactures solar modules, but constructs large-scale downstream projects for utilities and businesses.
That newfound shift in focus is what has helped FSLR stock produce some hefty gains since the depths of the Great Recession. Currently, First Solar’s utility scale systems business accounts for more than 85% of the company’s total revenues. Increasing sales to firms like Pacific Gas and Electric Company (PCG) has driven the financial performance of FSLR stock throughout 2013.
Unfortunately, this reliance of utility systems can also be a major headache as well.
During its latest earnings release, FSLR stock reported disappointing results. The key was that quarterly revenues were down by 29% on a year-over-year basis to just $768 million. U.S. utilities have significantly slowed the rate at which they’re signing new contracts. This is especially evident in the 200 megawatt-plus sized plants.
But with international utility-scale power plant plans on the docket, FSLR stock should be able to recapture much of its mojo over the longer term. First Solar is expanding into hot beds of solar activity like Japan and China. Ultimately, that should help restore the revenues in its systems business and return FSLR stock to real profitability.
As for SCTY stock…