2014 is off to a hot start in the solar industry, and Solarbuzz recently projected that 9 GW of solar was installed worldwide in the first quarter, and 50 GW will be installed throughout the year.
For manufacturers, this will be a huge benefit as they recover from incredibly low pricing and margins. SunPower (NASDAQ:SPWR), JinkoSolar (NYSE:JKS), and Trina Solar (NYSE:TSL) will be three of the biggest beneficiaries because of their high quality, solid balance sheet, and the fact that they're already profitable.
But rising panel prices may actually hurt installers. SolarCity (NASDAQ:SCTY.DL) and SunEdison (NASDAQOTH:SUNEQ) buy materials and panels from other manufacturers, and if demand rises significantly, so can prices. This could pinch their margins even as installations are rising. It's a delicate balancing act among the players in solar, but the rise in installations should be good for everyone.
In the video below, solar analyst Travis Hoium covers what we should take from first-quarter numbers and where investors should have their money now.
Travis Hoium manages an account that owns shares of SunPower and personally owns shares and has the following options: long January 2015 $5 calls on SunPower, long January 2015 $7 calls on SunPower, long January 2015 $15 calls on SunPower, long January 2015 $25 calls on SunPower, and long January 2015 $40 calls on SunPower. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days.