It's been a tough year in the solar market, and inverter manufacturers seem to be hit particularly hard. Satcon Technology (Nasdaq: SATC) is down 46.9%, and industry leader Power-One (Nasdaq: PWER) is down 20.6% due to a weak installation market in Europe.

Satcon didn't help the cause yesterday when it lowered revenue and margin guidance for the second quarter. The company hasn't hit expectations in each of the last four quarters and now an expected profit in the second quarter has turned to a sizable loss.

Solar companies like LDK Solar (NYSE: LDK), JA Solar (Nasdaq: JASO), and Trina Solar (NYSE: TSL), which rely on the European market, have been crushed so far in 2011 as demand fell off. But the second half of they year has less uncertainty about feed-in tariff rates, rising demand in the U.S., and emerging markets like China and India picking up some slack. So while demand might be weak now, this could be the right time to start getting into solar-related stocks before the market does.

We'll get plenty of comments on what the second half of 2011 looks like when manufacturers start reporting earnings in a few weeks. That's when we should get an idea if we're headed into a bull market for the sector or more pain ahead.

Solar vs. inverters
The problem for Satcon in particular versus its solar counterparts is the company's lack of profitability in a market full of profitable companies. Many solar manufacturers trade well below 10 P/E multiples (even Power-One is trading at just 7.7 times 2011's earnings estimates). Now that Satcon has lowered estimates, it looks like an even worse deal versus competitors.

In the inverter space Power-One is a much better buy -- and with fewer competitors than in solar power, this is a smart way to play the growing solar market.

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