By and large, the solar industry has been one of the sunniest market sectors for months now, riding a bullish streak that began back in August. But all signs seem to be pointing to gloomier days ahead.

First it was industry leader First Solar (Nasdaq: FSLR), which took a dip in October. And this week, other solar companies, including JA Solar (Nasdaq: JASO) and Solarfun (Nasdaq: SOLF), are starting to feel the heat.

Up to now, the rally has been sustained by strong demand, particularly in Germany, the world's top consumer of the modules that convert sunlight to electricity. But declining European government subsidies threaten to cut into profit margins as solar companies cut prices.

And with solar wafer costs on the rise, margins are expected to backslide even further in the next quarter.

Then again, that doesn't necessarily mean that the industry's bubble is about to burst. For one, company orders remain strong. And second, sheer momentum could keep many stocks going strong for some time to come.

It's hard to say when to expect the next eclipse for the solar sector. So we want to know, what does the smart money think about the industry? To find the answers, we crunched the numbers on institutional buying, and identified the solar stocks seeing a good deal of inflow over the past three months. And if these institutional investors aren't afraid of getting burned, that's a pretty good sign that your portfolio can withstand a little more exposure to the sun ...

Here is a list of the top three solar stocks in terms of institutional inflows over the past three months. (Click here to access free, interactive tools to analyze these ideas.)

Institutional data sourced from Reuters. The list has been sorted by change in institutional ownership over the past three months.

Company

Shares Held by Inst. Investors Today

Shares Held by Inst. Investors 3 Months Ago

% Change in Inst. Ownership

JinkoSolar Holding Co. (NYSE: JKS) 4,797,423 4,371,434 9.74%
ReneSola (NYSE: SOL) 28,667,103 26,983,981 6.24%
First Solar 63,621,921 61,309,406 3.77%

Interactive Chart: Click on the time line to compare performance of these stocks over different time intervals...


Disclosure: Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

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