First Solar, Inc. (FSLR), LDK Solar Co., Ltd (ADR) (LDK): Solar Stocks Rally and the Sky Is the Limit for Future Gains

Consider the fact that these companies (First Solar included) have posted sales of nearly $8.80 billion. These are all companies in the solar space, representing the bulk of the space. Yet the combined market capitalization of these companies is just $5.25 billion. So as an average, using the largest market presences in the solar space, this is an industry trading at just under 0.60 times sales.With the exception of coal, there is no space that trades even close to this range. And what it means is that with a little bit of progress these stocks have a lot of room to trade higher.

Conclusion

I believe my last sentence summed up the space very well: “with a little bit of progress these stocks have a lot of room to trade higher.” In my opinion, the space got its progress when the leader of the industry, First Solar, provided long-term guidance indicating many years of industry improvements. As a result, despite large gains, I think this is an industry to buy now and that investors should not look to the performance of a stock but rather valuation to determine how much upside exists. According to the valuation of this space, and individual companies, the sky is the limit.

The article Solar Stocks Rally and the Sky Is the Limit for Future Gains originally appeared on Fool.com and is written by Brian Nichols.