What to do now?
Are solar stocks on a never-ending rise or are we in for a straight-ahead fall? In the short term, I have no idea what will happen because many of these moves don’t make sense on a day-to-day basis. There’s no significant news out about SunPower today, yet the stock is up 19%.
Solar stocks going higher are particularly companies with strong balance sheets and competitive advantages. Sorry, that rules out almost manufacturers in China, which has industry standard products and leans on the government for funding. Trina Solar may be worth watching eventually, but it is still a big risk. In the U.S., SolarCity is also worth keeping an eye on, but I wouldn’t jump in so early in its development.
I would focus on two companies — First Solar and SunPower. To put perspective on how big the opportunity is, I outlined what SunPower would be worth if it traded at similar multiples to high-tech diversified manufacturers. It might shock you that this simple analysis yielded a stock price potential of $16.67-$79.22. Check it out for yourself in the article found here.
I don’t know if First Solar or SunPower will reach the lofty valuations of other high-tech companies, but if their fundamentals continue to improve then investors are in for a long run higher. The opportunity for solar is incredible; Wall Street is just starting to figure it out.
The article Solar Stocks Jump as Wall Street Hops on the Bandwagon originally appeared on Fool.com and is written by Travis Hoium.
Fool contributor Travis Hoium manages an account that owns shares of SunPower. Travis Hoium personally owns shares of SunPower and has the following options: Long Jan 2015 $7 Calls on SunPower, Long Jan 2015 $5 Calls on SunPower, and Long Jan 2015 $15 Calls on SunPower. The Motley Fool owns shares of Power-One.
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