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.
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