Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • AI Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    • Postcards
Login Archives Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • AI Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    • Postcards
    ×
  • Subscribe
Enter stock ticker or keyword
×
Join 100,000+ Like-Minded Investors Today
Twitter
Tags: Energy Investing

Stocks to Buy: Will Solar Shine This Year?

By , Money Morning • February 28, 2013

Start the conversation

Leave a Reply Click here to cancel reply.

You must be logged in to post a comment.

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.

But two recent purchases by MidAmerican Energy Holdings Co., a subsidiary of Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B), have brightened the solar stocks outlook.

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.

Let's Look at Supply Issues

A positive development for the solar sector is cutbacks in production of polysilicon, which is one of the basic materials used to build solar panel modules.

Credit Suisse's Satya Kumar says prices for polysilicon "have bottomed for the solar industry."

Major producers such as Germany's Wacker Chemie and Hemlock Semiconductor, a division of Corning Inc. (NYSE: GLW), lowered their polysilicon output last quarter and plan to do so again this quarter.

That would remove a major oversupply issue for the sector, which was kept prices falling.

Another bright spot for the solar sector is rising demand from China, whose government set a target that will make the country the world's largest installer of solar panels.

China is to double its rate of installations to a targeted rate of 10 gigawatts of solar power capacity this year, accounting for roughly a quarter of this year's global demand.

China also is increasing its goal for solar power installations by 2015 to 35 gigawatts from the previous target of only 21 gigawatts.

China's overproduction issues will also become less of a problem for the solar industry.

Chinese overproduction figures to fall this year because Beijing is growing weary of pouring money into its struggling solar industry. At the end of 2012, the State Council, China's cabinet, said it would encourage mergers and acquisitions among its solar companies by using "market pressure mechanisms."

This news from China and elsewhere led analysts Aaron Chew and Francesco Citro of Maxim Group to issue an optimistic forecast for solar demand. The analysts said demand for solar photovoltaic panels could rise 18% this year to 38.2 gigawatts.

The Maxim Group analysts told Bloomberg News the increased demand continues to be driven by "the severe collapse in module prices since 2011" due to overcapacity.

The overcapacity issues are nearing a bottom, but will still weigh on solar panel prices and hurt companies that haven't prepared.

Renewable power consultancy GTM Research says solar panel manufacturers still have a few years before the excess production capacity is completely eliminated. GTM believes roughly 21 gigawatts of production will be retired by 2015.

Three Solar Stocks to Buy that Will Outshine Competition

What does all this mean for investors in solar stocks?

It means now there are some solar stocks to buy - the better-run survivors that finally will begin to see some benefit from their endless efforts to cut costs and improve efficiencies. As their competitors struggle, these well-positioned companies will be able to service more of the growing demand for solar.

But you had better be choosy about which solar stocks you pick.

Here are three worth considering:

  • SolarCity Corp. (Nasdaq: SCTY) went public in December and is trading at all-time high, having nearly doubled in price to over $18. The company is an installer of solar power systems to all sorts of customers across the United States. In 2012, it deployed an above-expectations 156 megawatts. This was 117% above 2011's deployment of just 72 megawatts.
  • SunPower has utility contracts worth $3 billion through 2016 and strong growth in Japan. Also in its favor is a streamlined manufacturing process, which leads to high gross margins of 15-23%, according to Lazard, which recently upgraded its rating on the company. SunPower's stock price has increased more than 40% since Jan. 4, when Money Morning first reported on the company.
  • MEMC Electronic Materials Inc. (NYSE: WFR) is a silicon wafer company with a heavy emphasis on solar projects through its subsidiary SunEdison. SunEdison just sold two utility-scale projects to Canadian Solar Inc., with an option to buy three more in the future. Another positive sign: Two company insiders, one of them the CEO, bought stock in November. MEMC's stock has increased about 35% since Money Morning first reported on it Jan. 4.

Want more on energy stocks to add to your portfolio? Check out Money Morning's report on The Best Energy Stocks to Buy, According to Industry Insiders

Related Articles and News:

  • Money Morning:
    Solar Stocks to Buy: Three Companies Poised for Rebound
  • Bloomberg:
    China to Boost Solar Power Goal 67% as Smog Envelops Beijing
  • Barron's:
    Solar Names Rally on Polysilicon Cuts
  • Investors.com:
    Solar Energy ETFs Explode in New Year

[epom]

Here Are 10 “One-Click” Ways to Earn 10% or Better on Your Money Every Quarter

Appreciation is great, but it’s possible to get even more out of the shares you own. A lot more: you can easily beat inflation and collect regular income to spare. There are no complicated trades to put on, no high-level options clearances necessary. In fact, you can do this with a couple of mouse clicks – passive income redefined. Click here for the report…

Claim My Free Report

Subscribe
Login
Notify of
guest

guest

0 Comments
Inline Feedbacks
View all comments


Latest News

September 14, 2023 • By Chris Johnson

Tulips Are Telling Me How To Trade the Next 300% rally in AI

September 14, 2023 • By Garrett Baldwin

This Is My Biggest Economic Fear

September 14, 2023 • By Shah Gilani

earnings
What You Should Do About AI's Latest IPO Right Now
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Penny Hawk Midday Momentum
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Quantum Data Profits Flashpoint Trader Darknet Alpha Accelerators Brutus Alerts Resource Traders Alliance L.A.U.N.C.H. Investor Rob Roy Trader Long-Term Equity Profits

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information

wpDiscuz