Let the Sun Shine In on Solar Stocks

Friday, October 31, 2014 Let the Sun Shine In on Solar Stocks   by Jamie Dlugosch   Earnings season is going swimmingly.   Thus far, a majority of companies are beating expectations helping to propel the stock market off its recent lows.   Even better, revenues are coming in higher than Wall Street estimates.   If you recall, a big piece of the bear argument is that earnings growth has been mostly financial engineering in the form of debt issuance and huge stock buybacks.   Some refuse to believe in the economic recovery story, but if we believed those folks, much money would be left on the table.   As I look at the earnings calendar, I noticed that the solar stock industry is next in line to report results.     FURTHER READING   Surprise Apple Development No One Sees Coming   It's the ultimate iDevice. It's existence has been denied for years... yet this latest Apple "secret" will be hitting the shelves within the next 12 months.  And one American company is set to profit IMMENSELY when this happens. In fact, every time Apple releases a new product, shares of this company skyrocket.  Find out all about this company – and the vital piece of hardware that makes ALL Apple devices possible...   Click here to read the full story.     A number of key earnings reports are scheduled for the next week or two.  If current trend holds, the news should be positive.   And like many stocks in the market in October, solar stocks have struggled.   Could it be a buying opportunity in advance of the releases?   I think so.   So does Kirk Spano of Bluemound Asset Management, who has liked the solar space since 2012.   Investors who missed out  on the solar explosion back then can use current weakness as an opportunity to get involved in what is one of the fastest-growing industries in the world, according to Spano.   As countries diversify their energy portfolios, solar has tremendous potential to continue its impressive growth.   The bears will say that the recent collapse in oil prices might put a dent in the solar growth story, making it less competitive with crude.   That's a nonsensical argument.   There is much to gain from expansion of solar, no matter the cost of crude.   Over the very long term, having robust alternatives to oil is a must.   One of Spano's favorite solar stocks is First Solar (NASDAQ: FSLR).   As a leader in utility-scale instillations, First Solar is poised to benefit from global expansion of solar energy.   The company trades at or near book value and has a solid balance sheet combined with solid profit-growth prospects.   The company reports earnings results next week. With shares trading at a discount to yearly highs, beating expectations should lift the stock higher.   Spano also favors SunEdison (NASDAQ: SUNE). Although SunEdison is more highly leveraged than First Solar, Spano likes the utility aspects of the company.   He's not alone in that opinion. Some powerful hedge fund investors have gotten behind SunEdison, including Leon Cooperman and David Einhorn.   Einhorn thinks SunEdison could be worth as much as $35 per share or nearly double the current price of the stock.   The solar industry is not for the risk-averse. Stocks in the sector tend to be quite volatile.   Still, the recent discounts provide an excellent entry point for both the short and long term.   If earnings results are positive, the stocks should see a significant boost.   For example, just last quarter, Canadian Solar (NASDAQ: CSIQ) skyrocketed after its earnings report. Amazingly, shares of Canadian Solar now trade for close to what they were priced before that excellent result.   Look for a repeat performance this quarter as the solar companies start to release results.   Jamie Dlugosch Editor Investor Research Institute   To Read More From Investor Research Institute Click Here
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