Solar Stocks — Rising Or Falling?

Originally published on Solar Love.

Depending on who you ask, solar stocks are always either on the rebound and about to rise indefinitely, or about to fall further than they have for the past few years.

Solar’s Long Fall

To start with, in order to provide context to those who haven’t been following the solar stock or solar business story of the past few years, let me quickly run through some background:

  1. A handful of years ago, solar incentives from several governments and falling solar costs led to a big boom in solar power growth around the world.
  2. Following that, solar manufacturing capacity ramped up fast.
  3. Unfortunately, shaky, dropped, and sometimes even retroactively cut solar incentives led to a massive oversupply of solar panels and solar cells. This resulted in a long and steep solar technology cost drop.
  4. While great for consumers, the cost drop severely squeezed the profit margins of solar manufacturers, even taking down some big ones.
  5. In line with the falling profit margins, solar stock prices plunged.

Solar Stocks Rebound

This year, with supply more adequately matching demand and solar manufacturers picking up steam, stocks have started to rise again. Several companies have seen noticeable stock price growth.

Here are a few screenshots of 1-year stock price trends from some of the top solar companies.

SunPower Corporation (SPWR)

SunPower Stock

First Solar, Inc. (FSLR)

First Solar Stock

Yingli Green Energy (YGE)

Yingli Green Energy Stock

The Future?

Obviously, it looks like these solar stocks are on a strong rise. However, they have also all dipped a bit in August. The question now is, will these stocks rise back to the levels they were at a few years ago? Or are they already overvalued again and will fall?

Depending on whom you ask, you can get every answer along the spectrum. Personally, my take is that these companies are recovering and will succeed in the long term — and, thus, the stocks will rise again. However, I realize that margins are still very weak and there may be another year or so of pain before the true solar leaders emerge from the dust. I think all three of these companies will be in that bunch, but maybe not.

I’ve focused on just these three companies, but you may be interested in other solar companies and stocks. I think many more solar manufacturers will go under, and perhaps some big solar developers. Knowing which will survive and which will fall is anyone’s guess. However, for the most part, I’d put my money on the solar leaders of today, and may actually do so. They may not pull a quick, steep rise this year, but I think they are a good bet in the long run.

Any more thoughts on these solar companies and stocks, on other solar companies and stocks, or on the solar industry more broadly.

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