4 Awesome Solar Stocks - Investment Ideas

While the broader market struggles to shake off the summer cob webs, solar stocks have raced to the front of the pack, recently jumping higher on surging demand and a growing global presence. Although solar stocks have a reputation for volatility, there are more than a few reasons why the industry looks well positioned for long-term gains.

Fossil Fuels are Expensive

The first has to do with the rising cost of non-renewable sources of energy like crude, which is stubbornly stuck above $70 a barrel on the back of the global economic recovery. Unfortunately, the long-term picture doesn't look any better, where supplies will be constrained by growing demand from emerging markets like China and Brazil, increasingly difficult to extract reserves and a big helping of political instability in some of the biggest producer nations.

Governmnet Subsidies

Another factor driving the solar boom is the support the industry receives through government subsidies and tax breaks. Germany, for example, one of the leading solar countries in the world, pumps about $1 billion a month into developing its solar infrastructure, part of the countries long-term plan that some analysts believe will generate 25% of the countries electricity demand by 2050. China, the world's largest producer of solar cells, launched a hefty incentive in 2009 that rewards installations of 50 kilowatts or more.

The Environment

Although the previous two examples are focused on the economics of the solar industry, there is also a very big push for renewable energy sources for environmental reasons. Not only is solar a totally renewable resource, it is also friendly to the environment, producing no carbon emissions or toxic waste that stands to pollute the earth's fragile ecosystem.

So now that you have a better understanding of the key issues driving the solar industry, let's go ahead and take a look at some awesome solar stocks that are best in class.

Four Awesome Solar Stocks

Trina Solar Ltd. (TSL) is a Chinese company that sells solar modules worldwide with a market cap of $1.95 billion. This Zacks #1 rank stock has been hot for the last few months, almost doubling in price since finding a short-term bottom in early June. Estimates are on the rise, the next-year estimate is bullish and the valuation is solid, providing a bevy of fundamental strength to support more growth. Take a look at the chart below.

Solarfun Power Holdings Co. Ltd. (SOLF) is another solar company out of China, with a market cap of $675 million. This Zacks #1 rank stock recently hit a new multi-year high after reporting an awesome 76% Q2 earnings surprise in late July. The current-year estimate jumped 72% on the news to $1.82, a 132% growth projection. Take a look at the new high below.

Renasola Ltd. (SOL) is a Zacks # 1 rank stock that also recently hit a new multi-year high after posting its second consecutive earnings surprise in August. Estimates took a nice jump on the news, with the current year up 31 cents on the news and the next year gaining 54 cents to $1.46. With a forward P/E of 7X, this SOL also had value, take a look below.

Jinkosolar Holdings Co. (JKS) has been on a tear since going public, with its share price more than tripling in just the last four months. But don't worry, the Chinese based solar maker still has value, trading with a forward P/E of just 8X, a nice discount to the industry average of 12X. Take a look at the chart below.

Buy Some Solar Stocks

Although solar stocks will be volatile in the short run, the industry looks well positioned for long-term gains as both economic and environmental factors drive its growth.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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