3 Solar Penny Stocks to Watch in 2016

The U.S. solar industry will continue to soar in 2016, and we've picked three solar penny stocks to watch for big gains in 2016.

The latest information from the Solar Energy Industries Association (SEIA) shows the U.S. solar industry installed 1,393 megawatts (MW) of solar capacity in Q2 2015. That was the highest Q2 total in U.S. history.

solar-stocksThrough the first half of 2015, the solar industry supplied 40% of all new 2015 electric generating capacity - more than any other energy technology. With over 135,000 installations in the first half of 2015, nearly 784,000 U.S. homes and businesses have now gone solar. A new solar project was installed every 2 minutes in the first half of the year.

And that increased production even came at a time when energy prices were trading at multiyear lows.

You see, during most bear oil markets (like the one we have now), demand for alternative energy sources like solar tends to wane. Cheaper oil and gas make a switch to solar less appealing.

But that hasn't been the case this year.

"We haven't experienced that customary stagnation in this market," Money Morning Global Energy Strategist Dr. Kent Moors said. "In fact, the opposite is true, and alternatives have begun a long, steady rise. This is no fleeting market blip, though. Alternative energy, led by solar, is here to stay."

That's why we're targeting solar stocks in 2016. However, it's always important to remember that investing in penny stocks can be risky. While they can bring huge profits in a short time period, they can also be highly volatile.

That's why Money Morning experts advise that penny stocks should only represent a small percentage of any portfolio. In fact, one stock should never account for more than 2% of your investing capital.

But if you're willing to take on some risk while looking for a huge profit opportunity, here's a look at three promising solar stocks to watch in 2016...

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3 Solar Penny Stocks to Watch in 2016

Solar Penny Stocks to Watch, No. 1: China Sunergy Co. Ltd. (Nasdaq: CSUN) manufactures its solar cells from silicon wafers using crystalline silicon solar cell technology that converts sunlight directly into electricity. The company sells its solar cell products to Chinese and overseas module manufacturers and system integrators. These firms assemble CSUN's solar cells into solar modules and solar power systems for use in various markets. Its end products include solar cells and modules in different sizes and power outputs. China is a key market. In October, China reported increased capacity targets for PV installations by 29.78%. CSUN also announced in October that its factory in Korea started operations. CSUN sells solar cells and modules under the brands of CSUN and CEEG. Shares of this solar penny stock trade at $1.16.

Solar Penny Stocks to Watch, No. 2: Yingli Green Energy Holding Co. Ltd. (NYSE ADR: YGE) is an integrated PV product manufacturer. The company designs, manufactures, and sells PV modules. It also designs, assembles, sells, and installs PV systems. Products include PV modules and PV systems in different sizes and power outputs. YGE sells PV modules under its own brand names, Yingli and Yingli Solar, to PV system integrators and distributors. The company sells to customers in Germany, the United States, Italy, China, Spain, the Netherlands, Greece, Czech Republic, France, the United Kingdom, South Korea, and Japan. On Dec. 2, YGE reported Q3 earnings and revenue that beat estimates. YGE posted an earnings per share loss of $0.37, $0.03 better than estimates. Revenue came in a $351 million, better than forecasts of $333.5 million. Shares of this solar penny stock trade at $0.53.

Solar Penny Stocks to Watch, No. 3: STR Holdings Inc. (OTCMKTS: STRI) has become one of the best-known solar energy producers among investors looking to add a diversified solar energy stock to their portfolio. Based in Enfield, Conn., STRI designs, develops, and manufactures encapsulants that protect the embedded semiconductor circuits of solar panels for sale to solar module manufacturers. Its encapsulants can be used in both crystalline silicon and thin-film solar modules. The company was created in 1944. Shares trade at $0.41.

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