Investing in Solar Energy Stocks

We constantly hear the stress on going green andof the last century only to burst. To them there
developing alternative sources of energy not onlyis much hype associated with these stocks. The
for conserving energy but also for fighting globalmain reason for this impression is that it is
warming. Galloping world prices have also beenextremely difficult to develop economical and
responsible for increasing attention on findingviable solar energy. Costs associated with these
renewable sources of energy.are extremely high and therefore, it is very
As petrol prices have risen remarkably withdifficult to be profitable.
expectations of further growth, non-economicalThis is also confirmed with the behavior of equity
renewable resources are expected to becomeprices. With all time highs, most of these stocks
economical. Hitherto many of them could not befell by as much as 50 per cent at one time.
developed because of prohibitive costs.These are extremely volatile and may not be
Solar energy is one of the most prominentsuitable for majority of investors.
alternative sources of energy. Many countriesIt is also opined that there are many other high
have been toying with the idea of itsgrowth companies in which investors can put their
development. Unfortunately its share in overallincomes. There is no need to risk one's money in
energy sector is a measly 0.1 percent. Accordingthese risky stocks.
to statistics, solar power has recorded a growthMany solar stocks like Solarfun and First Solar
of 22 per cent during the last 10 years, with 35rose several fold during 2007 alone. Because of
per cent having been recorded during the last 5the greed involved in stock markets, many
years alone. However, it must be rememberedinvestors tend to get attracted and ultimately lose
that we are talking about a small base on whichtheir money.
these growth rates are calculated.Most of these companies are china based. We
Prominent Solar Stocksmay not be sure of the final valuations of their
With the spectacular growth of solar energy,businesses.
there have been rising expectations, reflectingThe Bright Side
extremely high valuations of solar stocks. FirstHowever, all is not gloomy with solar stocks. Solar
Solar has been having a valuation of more thancompanies have billions of long term contacts,
182. Everyone seems to be catching up for athey have bright guidance, they are backed by
share of solar companies. Most prominent solartheir national governments and in some countries
companies which found favor with a large numberthere is plenty of sunshine available, ready for
of investors are:o First Solar (FSLR)o SunPowerexploitation.
Corporation (STP)o Suntech Power Holding Ltd.Venture capitalists are pouring in huge amounts of
(LTP)o JA Solar (JASO)o Solar Enertech Corpmoney in this energy sub sector. Who knows
(SOEN(o Nano Solaro Miasoleo China Sunergysome solar stocks may turn out to be gold mines.
(CSUN)o LDK Solar (LDK)o Solarfun (SOLF)Recommendation
In addition to the above there are a large numberInvestment in solar companies seems to be very
of smaller players which are still under therisky, though lucrative. Investors in these should
development stage. Most of these are youngpay attention to their PEO ratios. Another
companies. Take the case of First Solar. Even thislucrative option can be solar ETFs. Moreover
company started only in Nov 2006.some companies like GE are spending heavily in
On The Thresholds of High Tech Bubblesolar power though as a fraction of their total
To many critics, investing in solar stocks is justinvestments. It might be advisable to invest in
like investing in high tech stocks towards the endthese companies instead for the sake of safety.