China and the U.S. are at it again-this time they're arguing over a potential trade war in solar panels. Members of China's solar industry are claiming they want to avoid a trade war; however, a U.S. investigation into China-based panels is pending.
A few weeks ago the U.S. Commerce Department opened a probe into claims by American manufacturers that China was "dumping" low-priced solar panels into the U.S. (subsidized by the Chinese government). The trend has been a headwind for American solar panel makers, among them Solyndra and Evergreen Solar, who have recently gone out of business.
Majority market share
According to the New York Times, Chinese solar panel manufacturers are growing faster than their American counterparts, having raised their American market share to over half, from almost zero five years ago.
A recent statement from the China Chamber of Commerce for the Import and Export of Machinery and Electronic Products (CCCME), which represents their solar industry, said they opposed the U.S. investigation and that their success has only been due to competitive advantages. They also said the firms did not intend to start a trade war with the U.S.
Last Friday, China announced "an investigation into U.S. government policy and subsidy support for renewable energy, including solar equipment," according to CNBC.
Although the U.S. probe threatens China's business, a trade war also threatens business to U.S. solar firms, according to CNBC. China's solar industry association recently said they may ask Beijing "to launch an anti-dumping and subsidy probe into imports of U.S. polysilicon, the raw material used to make solar cells."
Investors often don't like fighting words, but if you continue to believe in the high growth of clean energy, you may be interested in this list.
We ran a screen on the most profitable clean energy stocks traded on U.S. exchanges, with gross, operating, and pre-tax margins greater than their industry peers.
Do you think these companies will outperform, despite the possible trade war?
List sorted by difference between gross margin and industry. (Click here to access free, interactive tools to analyze these ideas.)
1. Pinnacle West Capital
2. Donaldson Company
4. Dominion Resources
5. US Ecology
6. Waste Connections
7. Republic Services
8. MGE Energy
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. Profitability data sourced from Finviz.