And there are still plenty of reasons to be bullish.
After being left for dead during much of the stock market’s recovery from the Great Recession, solar power is coming back with a vengeance. From improving grid integration costs to rising demand in both the emerging and developed world, it looks like solar’s place in the sun has finally come. And because solar represents a very long-term play on the energy markets, investors still have plenty of time to cash in on the solar stocks rally.
But how exactly should they go about adding solar stocks to their portfolio? Some are shining brighter than others. Here are four of the best solar stocks to buy now … and in the years ahead.
First Solar Solar Stocks To Buy #1:
The recent broad market selloff has given investors the opportunity to buy solar stock leader First Solar (FSLR) at a cheaper price than just a few weeks ago.
FSLR continues to plow headfirst into its strategy of building large-scale and grid ready solar facilities for electric utilities. These massive projects have been a main source of revenues for FSLR — currently about 65% of its total sales. Building and selling these large solar farms have also been a boom to First Solar earnings, as well. For the first quarter, earnings jumped 66% year-over-year to $1.10 per share. That number managed to trump Wall Street estimates by a significant margin.
And more of those gains should be in store for FSLR stock.
During the quarter, FSLR managed to increase its backlog of new grid-scale solar projects to 2.8 gigawatts (GW) while also identify another 12.2 GW worth of new potential sites for solar farms — both in the U.S. and abroad. More importantly, it’s beginning to tap those opportunities. FSLR just received financing and approval to go ahead a build a massive 141 MW solar farm in Chile.
Nothing has fundamentally changed in the First Solar story. The only difference is that investors now have an opportunity to snag FSLR stock at a dirt-cheap forward P/E of 13.
Solar Stocks To Buy #2: SunPower
Photovalic panel producer? Check. Utility scale solar facilities? Check. Residential solar installations? Check again. SunPower (SPWR) does it all and is quickly becoming the best all-around solar play.
On the panel side, SPWR features some of the most efficiently designed solar arrays. The solar stock recently began testing panels that have a cell efficiency of 25% and will deliver 75% more power over a 25-year period. That’s a huge cost savings for consumers and other large-scale end users.
Technological leap aside, SPWR is getting those panels into the hands of more people.
The firm has partnered with Toshiba to begin selling its range of solar products to utilities and consumers in energy-starved Japan. Already, SunPower has been able to see the fruits of that partnership and has gown revenues in the region. At the same time, here at home, SPWR has gone whole-hog on residential solar. Its residential energy solutions booked 6 MW of capacity during the first quarter of the year and 172 MW since the business began.
All in all, SPWR stock is turning into a profit powerhouse and could be the best all-around solar stock in 2014.
Solar Stocks To Buy #3: SunEdison
For solar stock SunEdison (SUNE), it’s all about transformation.
After getting a name change a few years ago — remember MEMC Materials? — SUNE has finally made the plunge to become a pure solar player by spinning off its semiconductor assets as SunEdison Semiconductor Limited (SEMI). Freeing itself of the boring chips business, SUNE now has opportunity to hone in on faster-moving solar energy.
And it has been doing that in a big way.
First, SUNE has become not just a panel producer, but owner/operator of solar farms — similar to SPWR & FSLR. However, SunEdison is taking the idea one step further. Rather than just sell off projects once they’re completed, it’s keeping them on its balance sheet. SunEdison retained approximately 240 megawatts’ worth of solar farms during the first quarter. It’s even taking that further by recently buying a 50% stake in Silver Ridge Power’s 336 MW worth of solar farms.
What it intends to do with those is also a huge deal. SUNE is the first solar firm to use the new YieldCo strategy and “drop down” some of these assets in a new subsidiary dubbed Terraform Power, Inc. (TERP). By placing various solar farms into TERP, SunEdison will gain cheap access to capital, while kicking back some hefty distributions to itself and shareholders.
While the story at SUNE stock is about a turnaround, it seems that the ship is truly righting itself.
Solar Stocks To Buy #4: Trina Solar Limited
If you’re going to buy one Chinese solar stock, it has to be Trina Solar Limited (TSL). As one of the oldest and most financially stable panel and systems producers in the nation, TSL has the goods to get through any solar hiccups due to recent trade disputes.
And while the solar trade issues may have crimped demand for its products in the U.S. and Europe, TSL is seeing huge results in its native land.
Trina recently just unveiled a new contract to provide 200 MW worth of panels for projects across five provinces in China. That follows a similar deal to supply 60 MW worth of PV for additional projects in the emerging market nation. Given the recent hints at Chinese stimulus — including a hefty dose of rooftop subsides in China — TSL and its efficient panels could be a huge buy based on that domestic demand.
Add in the pending shortfall of high-quality panels and TSL stock could easily hit its average $19 per share price target by the end of the year. That marks about a 60% gain from today’s selling price, making TSL one of the best solar stocks out there.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.