As I’ve been telling you for some time now, the alternative energy sector is set for massive gains. Here now to shed some light on the profit potential in solar energy stocks is Green Chip Review editor Nick Hodge.
In addition to his insights on solar energy, you can read Nick’s research on the world’s water crisis and the water treatment and water conservation technology companies poised for major growth every Thursday in Green Chip Review.
This article was published last week in Green Chip Review. I already know investing in solar stocks is a winning proposition, but for anyone else who is not convinced, Nick’s article is required reading.
At this point, the bull market in solar energy stocks has been flying under the radar for an extended period of time. Too long, if you ask me. So today, as Brian said, we'll take a look at what's been going on in this industry.
But first, it's important to note that this sector hasn't made its extraordinary run completely unnoticed. Corporate behemoths like First Solar (NASDAQ: FLSR) and SunPower Corp. (NASDAQ: SPWR) have received quite a bit of fanfare. And rightly so. In just the past year they've posted gains of 424% and 183%, respectively.
But there are certainly more high-performance solar plays out there than just these two gems. In fact, at this very moment there are five pure solar plays in the Green Chip Stocks portfolio. And those five stocks are up an average of 121%!
There are, however, even more good solar stocks out there that aren't talked about every day. In this wide-ranging sector, solar manufacturers aren't the only way to go. There are also installers, system integrators, inverter suppliers, and silicon plays.
Solar Stocks Growing Fast
The global market for silicon-based photovoltaic (PV) panels has grown 42% annually for the past five years. And since 2004, the market value of all the world's publicly traded solar companies has grown from $1 billion to $71 billion—a 7,000% increase.
That's due, in part, to not only the growth of panel manufacturers, but to an explosion in niche markets embedded in the solar industry.
Like Cypress Semiconductor (NYSE: CY), which, beyond providing numerous silicon-based products and solutions, also guarantees a steady supply of raw material to its subsidiary, SunPower.
Its reward for dabbling in the solar industry? Only an 86% gain in the last twelve months and an outpacing of the now back-on-track Dow Jones by over 50%.
Or how about Amtech Systems (NASDAQ: ASYS), which, despite not making one solar cell, has seen a 45% increase in revenue from third-quarter 2006 to third-quarter 2007. The company makes and sells systems for the automated loading and unloading, as well as for the production, of silicon wafers.
Amtech is up 71% in the past six months and has crushed the Dow by a similar margin.
But, naturally, those aren't the only solar-related companies that have made, and will continue to make, serious money.
Other Solar Energy Factors
You see, the solar market is still very fragmented. And that's because no clear winner(s) have emerged.
For the solar industry to really establish roots and confirm its position as a future energy stalwart, it must first reach what has become known as "grid parity." That's when the price of producing electricity via PV reaches the price of buying electricity at the retail level.
As with most issues in the current energy arena, there is some haze surrounding this one as well. When comparing electric prices, it is often made very apparent that the solar industry is still highly subsidized. But it is normally forgotten that traditional sources like oil and coal are heavily subsidized as well, and have been for quite some time.
Plus, once a solar array has produced enough electricity to cover its initial capital costs, any additional energy produced is free. Certainly this is not the case with sources that continually require the burning of costly hydrocarbons.
My personal qualms about grid parity aside, it is predicted that solar will not reach it for the next five to seven years. During that time, every company will be striving to drive down costs in order to compete with traditional sources of energy.
As that happens there will be little consolidation. Each company will want to keep and increase its market share until there is an established solar energy system that optimizes all angles of efficiency, installation, and aesthetics.
There will be many factors that determine which type of system is best: geographic location, silicon price, owner preference, legislative incentives, and the rising cost of other energy feedstocks, to name a few.
But one thing remains certain. No matter which company has a solar technology breakthrough, no matter which installer minimizes costs the most, Green Chip will be there. We were here first, and we remain on the leading edge of clean-tech industry.
In mid July we released the name of a company doing some very hot stuff with thin-film solar panels and building integrated photovoltaics. That company, while already up 25%, is still trading well below $1.00.
And in the immediate future we'll be releasing the name of another solar play that I believe will do even better.
The renewables industry is here to stay. It is quickly becoming mainstream. But you can still be one of the savvy green investors who will make a killing on its ascendance. All you have to do is become a Green Chip Stocks member.
The nominal fee for our service will be more than recouped from the gains you will accrue every day from the quality stocks recommended by Green Chip.
To become a member today, click here.
Until next time,