Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

SunPower Corporation (SPWR), First Solar, Inc. (FSLR), Sunedison Inc (SUNE): Do Solar Stocks Deserve a Place in Your Portfolio?

Page 1 of 2

While solar technology was once confined to pipe dreams and college kit car races, technological advances and government mandates have moved the solar business into the mainstream. Consumer demand generated by healthy tax credits has allowed companies to gain manufacturing efficiencies and lower unit costs, helping to move the industry closer to parity with fossil fuels. Even the utility sector has finally taken notice, as giants like NRG Energy Inc (NYSE:AIG), Exelon Corporation (NYSE:EXC), and Berkshire Hathaway Inc. (NYSE:BRK.A)’s MidAmerican subsidiary are investing billions in solar plants. Despite profit challenges for the industry, renewable energy is here to stay. So, how does an investor play this sector?

SunPower Corporation (NASDAQ:SPWR)

SunPower Corporation (NASDAQ:SPWR) would be a good choice, as it has been a pioneer in the solar business with silicon-based solar cells that lead the industry in efficiency. The company has a strong position in the residential segment, but has been making a push into large commercial projects, including California’s massive Antelope Valley Solar Project. SunPower Corporation (NASDAQ:SPWR) has also pushed economies of vertical integration through its joint ventures in the silicon production and wafer processing areas.

SunPower Corporation (NASDAQ:SPWR) had trouble gaining sales momentum in FY2012, with total revenue up 1.8%, as growth in its Americas and Asia-Pacific regions was offset by very weak performance in its European region. Despite delivering 13% more solar products than in the previous year, based on electricity generating capacity, the company’s product prices continued to decline due to excess inventories around the world. In addition, some countries have downwardly revised their subsidies to the industry, especially members of the European Union.

Regardless of the industry’s current supply-demand imbalance, SunPower Corporation (NASDAQ:SPWR) is thinking long term and is working to complete its plant in Mexico, which will add 12 assembly lines and nearly double its annual capacity. Given lower expected future prices for solar products, the company needs to gain greater scale in order to reach its profit breakeven level. Fortunately, SunPower Corporation (NASDAQ:SPWR) has a strong ally in majority shareholder Total SA (ADR) (NYSE:TOT), which provides crucial capital and a global network of contacts.

Another good choice would be First Solar, Inc. (NASDAQ:FSLR), the world’s largest producer of thin film-based solar products. Despite a slight overall disadvantage to silicon technology in sunlight conversion efficiency, thin film products perform better in high temperature, sunny climates that figure prominently in utility companies’ future capital plans. More importantly, First Solar, Inc. (NASDAQ:FSLR)’s technology allows it to avoid the high costs of the silicon supply chain, leading to a higher gross margin across business cycles.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!