Wall Street is jumping on the solar bandwagon at breakneck speed in 2011. If you weren't on board until now, the latest upgrade might get your attention. Goldman Sachs added First Solar (Nasdaq: FSLR) to its "conviction buy" list, leaving this Fool to wonder if there is a way to upgrade from "conviction buy"? Is there a "seriously, you need to buy this stock already!" list?

It was just two short months ago when Wall Street couldn't downgrade solar fast enough. 2011 looked like it was going to be full of oversupply, falling margins, and the possibility of a shakeout as weak suppliers got squeezed out. But since then solar has been rising and analysts have been given plenty of reasons to turn bullish.

  • LDK Solar (NYSE: LDK) announced increased guidance and expectations to make more panels than anticipated in-house.
  • Germany gave solar a boost when word came out it was considering a lower feed-in tariff instead of a higher tariff and a hard cap on installations.
  • Project signings in the utility market has given investors more confidence that 2011 and beyond will provide enough demand for solar panels.

It isn't like solar Fools didn't see this coming. Every once in a while we repeat the same cycle with solar. First no one knows where demand will come from, so analysts issue downgrades and solar stocks sink. Then Germany or some other major market softens its blow to solar by extending feed-in tariffs or eliminating a hard cap. And finally, solar companies report blowout results, give strong comments about demand and we start the cycle over again.

Visibility is the key on Wall Street
Goldman likes First Solar's "visible demand," aka large-scale power plant business, which eases some of the anxiety analysts have with solar. The 290-megwatt Agua Caliente project in Arizona recently received a commitment for a loan guarantee by the Department of Energy. AV Solar Ranch One, a 230-megawatt project is also moving forward after receiving final environmental permitting.

First solar isn't the only one with visibility into future demand. SunPower (Nasdaq: SPWRA) also has a large backlog of projects giving analysts covering solar a reason to sleep better at night. After all, if Wall Street can't see the demand coming how can it possibly exist?

If demand anxiety doesn't worry you, Trina Solar (NYS: TSL) and Yingli Green Energy (NYSE: YGE) are cost leaders that should benefit as investors become more confident in solar. The rising solar tide will lift all stocks but if the tide goes out you want to be with a leader in cost or efficiency like the companies I have mentioned.

Interested in reading more about First Solar? Click here to add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

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

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