Here comes the sun..! 3 Solar Stocks set to Shine
Here comes the sun..! 3 Solar Stocks set to Shine..!
The solar sector has seen an impressive expansion in recent years, with a compounded annual growth rate in installations of 59% from 2007 to 2012. As oil and gas prices rise alongside political calls for clean energy, analysts at Citigroup predict sun-generated energy will be in high demand.
The solid growth and strong demand potential have, however, not been reflected in shares prices in recent years. In fact, it’s been ugly. But that only helps support the case that now is the time to take a closer look.
“Key point, many of the U.S. utilities we have surveyed over the past several weeks have highlighted the need to diversity into other generation sources — it is well understood that gas prices won’t stay depressed forever,” they said in a report Wednesday.
The analysts said they prefer companies in the downstream business, such as project development, distribution and installation, over firms in the upstream market, including panel manufacturers and electrical components suppliers.
“We surveyed over 20 electric utilities in the U.S., [and] one key theme emerged: it has become very difficult to distinguish one panel manufacturer from the other — they all look the same, per respondents. This was not the case in the past,” they said.
1. First Solar, Inc.
First Solar, Inc. is considered the bellwether in the downstream market, and with the downstream names poised for stronger growth than upstream counterparts, this is a company to watch. Additionally, management has made strong restructuring progress and has won several projects in key growth regions, the Citigroup analysts said.
“FSLR’s balance sheet strength and bankability premium should allow it to continue to capture large scale projects in key growth regions globally—we see a robust pipeline outlook for the next several years,” they said.
The negatives: The Tempe, Ariz.-based company is largely exposed to the California region, which has already met its Renewable Portfolio Standard levels through 2016. On top of that, the panel manufacturing arm of First Solar remains a drag on the company and could partially offset the strong performance in its downstream units.
2. Advanced Energy Industries Inc.
Following recent restructuring efforts, the Fort Collins, Col.-based company has become “a healthy cash generator” and is well positioned to benefit from both commercial and utility scale projects in North America.
“Shares of AEIS are a core holding for investors looking to gain exposure into the downstream solar market while avoiding some of the pitfalls that have impacted the upstream segment—i.e. the commoditization of the module business,” they said.
The negatives: Larger players making a push in the North American market, such as SMA Solar Technology AG and Power-One Inc., could add pressure on Advanced Energy’s margins and pricing power.
3. SunPower Corp.
Citigroup characterizes SunPower as the perfect solar package, highlighting the company’s exposure to growth in Japan through its partnership with Toshiba Corp. and Sharp Corp. Additionally, it is 66% owned by French oil giant Total SA, creating an effective backstop.
“With a global recognized brand and distribution channel, we believe SPWR is best positioned to capture growth in the residential and commercial scale market — early growth segments,” the analysts said.
The negatives: The San Jose, Calif.-based firm suffers from a higher cost structure than the broader industry and still has a sizable exposure to the weak Western European market.
This is just from an article I found on the web…http://www.marketwatch.com I am in no means an expert & I am not offering any financial advice…My disclaimer.
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