Conditions are getting better for American Superconductor (Nasdaq: AMSC), but it's still not free from the struggles that brought the company to its knees last year. The market cheered a better-than-expected earnings report last week and hoped that it's a sign of things to come.

The company saw sales more than triple from a year ago, to $28.7 million, and net loss fell from $37.7 million to $10.3 million. Now that the company's revenue stream is more diverse, with customers in China, Korea, and India in wind and Australia and Romania in grid, investors can be a little more confident in the results. When Sinovel was the company's main customer, the company's future was hanging by a string.

AMSC's lawsuits against Sinovel continue to move forward. Management said that three civil lawsuits and a commercial arbitration case are worth a total of about $1.2 billion, including $700 million in contracted shipments to Sinovel. From an investment standpoint, this is where the company's huge upside potential lies. The only problem is, we have no idea how Chinese courts will rule in this case.

Wind and grid businesses improving
The wind business is still struggling globally, which is affecting the market dominated by big players like General Electric (NYSE: GE), Siemens (NYSE: SI), and Vestas. Sales have struggled in recent years as competition from Asian players has picked up. Ironically, this is what has helped AMSC nearly quadruple its wind business in the past year.

In grid, the company's revenue rose from $4.8 million a year ago to $12.2 million on the back of growing demand from the renewable industry. But despite strong results from American Superconductor, First Solar (Nasdaq: FSLR), and Power-One (Nasdaq: PWER) in the last week, showing momentum in renewables, equipment makers haven't seen a big boost in their stock prices. Unlike AMSC, the other two are solidly profitable and trading at multiples that normally make value investors giddy.

Competition remains strong as companies try to grab pieces of the renewable energy pie and American Superconductor has solutions that should continue to benefit from these trends. But the company's loss is concerning, and I still think the only reason to jump on this stock over First Solar or Power-One would be the upside potential from a ruling in China. But that's a gamble considering China's history with intellectual property.

The renewable business is driving results right now and one way to play it is with solar giant First Solar. To find out more about this solar giant, check out our detailed report on the company. It comes with a fresh update on the company's second-quarter results, so click here for access.