Please ensure Javascript is enabled for purposes of website accessibility

Wall Street's Running Circles Around Solar

By Travis Hoium – Updated Apr 7, 2017 at 12:01AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Analysts have scrambled to upgrade solar shares after the industry kicked off 2011 with a strong outlook.

Analysts are certainly having a hard time figuring out what to do with solar stocks in 2011. This past November when Satya Kumar at Credit Suisse downgraded solar stocks, I took him to task for being off 58% on his 2010 installation projection and underestimating solar again in 2011.

This week, I could see the backtracking coming when LDK Solar (NYSE: LDK) blew investors away with its increased guidance. As the driver of the solar bandwagon this year, I feel obligated to welcome every analyst as they hop aboard. Our first analyst to take the leap was Mark Bachman at Auriga Securities, who raised ratings for JA Solar (Nasdaq: JASO) and Canadian Solar (Nasdaq: CSIQ). He sees a "slight" oversupply as installations rise 23% in 2011 and another 24% in 2012.

A day later, Vishal Shah from Barclays Capital hopped aboard, upgrading Suntech Power (NYSE: STP) and increasing his price target to $12.

The increased confidence by analysts may give investors reason to hop back into these turbulent waters. Falling costs and rising fossil fuel prices are also boosting solar, leaving it in a potential economic and political sweet spot. We may not see any major policies like cap-and-trade in the U.S., but the will to make solar a major part of our energy future could see a boost if oil hits $100 per barrel.

If you're thinking about jumping on the solar bandwagon, this Fool would stick to big names with strong balance sheets and low module costs. Trina Solar (NYSE: TSL), Yingli Green Energy (NYSE: YGE) and First Solar (Nasdaq: FSLR) are on my short list, flanked by the companies mentioned above.

I'm bullish, with caution
As much as I like solar in the long run, there is a lot of uncertainty in the second half of 2011, and the big players will flex their muscles if 2011 gets tough for solar. After the third quarter, management at solar companies thought 2011 would be a strong year, and as fourth-quarter 2010 earnings are released, we should find out if the sentiment has continued.

Interested in reading more about solar? Add one of these companies to your watchlist to find all of our Foolish analysis on this stock.

More on solar:

Fool contributor Travis Hoium owns shares of solar companies First Solar and SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

First Solar and Suntech Power Holdings are Motley Fool Rule Breakers selections. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

First Solar, Inc. Stock Quote
First Solar, Inc.
FSLR
$129.85 (-1.46%) $-1.92
Canadian Solar Inc. Stock Quote
Canadian Solar Inc.
CSIQ
$36.84 (-1.45%) $0.54

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.