New technologies present new opportunities, and an advancing industry is solar energy. The desire for energy is only growing, as nations like China and Brazil emerge as first-rate economic powerhouses. In 2010, China even passed the United States as the largest consumer of energy.
The demand has sent the price of traditional forms of energy, like oil and gas, to maintain extraordinary highs, and empowered groups such as the Organization of the Petroleum Exporting Countries (OPEC) to become global policy players.
The dependency of nations on a limited resource doesn’t go unnoticed. Many governments around the world provide subsidies to solar companies, investing in them, so that they may freely research and improve the technology. The lure of solar power is enticing no doubt, to have energy as long as there is the sun. The push for renewable and sustainable energy is a no-brainer. Where demand is high, suppliers are sure to win.
Solar companies have been around for almost 30 years, but the technology has only recently gained a foothold as efficient option. It hasn’t been an easy ride either. In 2008 and 2011, there were sector-wide pullbacks on listed solar companies. Many companies lost all their gains, dropping back to IPO prices. 2012 did not show much promise either as share price saw mild growth. However, the story is different in 2013: Companies double and tripled their value. Though, still far from their all-time highs, solar companies are a tantalizing investment opportunity in 2014.
5 Solar companies to watch:
1. SolarCity Corp. (NASDAQ: SCTY)
Anything attached to red-hot Elon Musk, the visionary CEO of Tesla (NASDAQ: TSLA) and SpaceX, gets some attention. Led by Musk’s cousins, Lyndon and Peter Rive, SCTY is one of the leading providers of solar installation in California. Along with its prominence in solar installation for the residential market, its defining features is its forage into electric vehicle charging stations, likely influenced by its close relationship to Musk and TSLA. If the star power of Elon Musk isn’t enough, Google (NASDAQ: GOOG) funded $280 million to SCTY in 2011.
2. SunEdison Inc. (NYSE: SUNE)
With so many solar companies, what makes SUNE one to watch? In my opinion, SUNE is the best solar investment. In 2013, SUNE has more than tripled its value, starting the year at $3.70 per share to its current price of $13.24 per share. The low dollar amount per share makes it viable for all types of investors as well. Perhaps SUNE‘s most striking feature and strongest indicator of investment potential, is that 89% of its shares are institutionally owned, the highest in the sector.
3. First Solar Inc (NASDAQ: FSLR)
FSLR is the largest U.S. solar firm based on market capitalization. It is 61% institution owned, with a P/E ratio of 11.75. It ranked 1st in 2011 Forbes’ fastest growing U.S. tech companies, and 1st in 2012 and 2013 in Solar Power World magazine ranking of solar contractors. These are the facts, and when they come together, it represents one of the best solar companies for long term investment.
4. Yingli Green Energy Holdings (NYSE: YGE)
YGE is a Chinese company. With that said, there are the risks and myths associated with it. However, it has been on the NYSE for over 5 years, and that is no small feat. It manages a strong social responsibility program and a global market presence. The 52-week range of its share prices is $1.62-$8.77, and is currently $4.65. Volatile numbers considering the percent difference is quite high, therefore YGE is a riskier investment opportunity.
5. SunPower Corp. (NASDAQ: SPWR)
Founded in 1985, SPWR is one of the oldest solar companies. It owns the solar tracking patent, and in June 2013, announced the production of a solar cell with a 24.2% sunlight to energy efficiency rate, highest in large-area silicon wafers. SPWR operates in two segments: Utility and Power Plants (UPP) and Residential & Commercial (R&C). They also have a certification process for independent dealers. These factors contribute to a presence and relevance in the business, unmatched. They have worked with the likes of NASA, Ford Motors (NYSE: F), and KB Homes (NYSE: KBH).
Guggenheim Solar ETF (NYSEARCA: TAN)
TAN seeks to invest in solar companies. Its investments involve approximately 25 different stocks based on its relevance to solar power. Therefore, by observing the movement of this company, it is a great way to feel the pulse of the market. For those that truly believe in the potential of solar power, this one is for the long play.