Since legendary investor Warren Buffett took a liking to solar this year, investors have been wondering if it's time to revisit this beleaguered industry when looking for stocks to buy in 2013.
The solar sector has endured a beatdown for about two years, with massive oversupply of solar panels and unfavorable publicity combining to keep solar stocks down.
MidAmerican announced a $2 billion to $2.5 billion deal to buy two California solar power projects from SunPower Corp. (Nasdaq: SPWR). MidAmerican also agreed in January to invest in what will be the world's largest solar photovoltaic operation, which is partly owned by First Solar Inc. (Nasdaq: FSLR).
Many solar stocks and solar ETFs, including Market Vectors Solar Energy (NYSE: KWT) and Claymore/MAC Global Solar Index (NYSE: TAN), have soared on the MidAmerican news. They're both up about 17% this year.
Does this mean investors should follow Buffett into solar stocks? Here's a look at the sector.
Investing in 2013: Are Chinese Solar Stocks Worth All the Recent Hype?
Here's something you can safely say about China: They get things done.
That point was driven home to me a few years ago by a former Southern Company nuclear engineer who was consulting on building nuclear reactors in China.
"There are two things you can say about the Chinese way of doing things," he said admiringly, "one, once they decide to build a facility, it gets built and two, they bring it in on time."
He also noted that the builders took great pride in their work and if they say the cement was going to be laid by a certain date, the crew worked overtime and weekends to bring it in on time-all without overtime pay.
And the one thing a command economy like China has going for it is once they site a project, it gets built. There are no environmental impact studies, no legal issues, no historical impact hearings, and no worries about displaced families who may have lived on the land for centuries.
I bring it up because now it looks like the Chinese are back in the renewable energy business leading to a bull stampede into Chinese solar stocks.
China's Renewed Drive Into Green Energy
In early January, government officials announced at a national energy conference that they intend to add 10 gigawatts (GW) of installed solar power capacity this year, up from 7 GW at the end of last year.
The goal for 2013 will put China within easy reach of its stated target of 21 GW of installed solar power capacity by 2015.
That followed an announcement in December that China was going to provide $2 billion in subsidies for the country's solar industry.
And now the green energy community around the world is very excited that at least one major nation is willing to step up and stand behind its renewables industries and offer some incentives.
It is bit of a turnaround for an industry that had fallen on some hard times.
Over the past year in the United States, we saw what happened with some of the best intentioned government-driven green energy programs.
Can anyone say "Solyndra"? Or, "once bitten, twice shy"?
Then Germans pulled their solar and wind tax credits and subsidies. And now with the country's economy headed into recession, it's unlikely the Germans will be back on the renewables bandwagon anytime soon.
So will China's renewed push into renewables create a new boom for solar and wind stocks?
Here's what to expect.
Solar Stocks to Buy: Three Companies Poised for Rebound
The majority of investors, when considering stocks to buy, have given up on solar companies.
That's mostly due to a two-year beatdown of the sector and plenty of bad publicity from the demise of federally subsidized Solyndra.
But while the sector continues to suffer - more solar companies will likely go under in 2013 - a choice few are positioned to benefit from a rebound that will start this year.
One sure sign of better days ahead is that the sector has recently attracted interest from one of the world's most respected investors, Warren Buffett.
Just within the past month MidAmerican Energy Holdings Co., a subsidiary of Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B), announced a deal to pay SunPower Corp. (Nasdaq: SPWR) between $2 billion and $2.5 billion for two California solar projects.
That followed MidAmerican's purchase of a 49% stake in an Arizona solar plant jointly owned by NRG Energy Inc. (NYSE: NRG) and First Solar Inc. (Nasdaq: FSLR), as well as the $2 billion purchase of a planned solar farm in San Luis Obispo, CA, also from First Solar.
Here's why Buffett has taken an interest.
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