Global leaders have recently convened in Copenhagen to discuss one of the hottest topics in the world, climate change. Granted, it didn't exactly go off without a hitch but putting that kind of political firepower in one place means it's a big deal. Now, whether you scrapped your car and bike to work everyday or continue to pump diesel into your SUV, is irrelevant.
Smart cars, renewable energy, carbon footprint and many other buzz words have been scattered across headlines for the past few years. While these are far from new concepts, the urgency seems to be at its peak. The bottom line is that the green movement has produced a plethora of investing opportunities.
So Where is the Green?
Just about every aspect of the "green movement" around the globe has been explored, but we continue to come back to solar energy. This does not surprise me. Here in Chicago we even have solar powered parking meters and trash bins. The difference between clean coal, natural gas, or any other alternative is that you are still using a resource. Renewable or not, it takes time and energy to continually produce and could potentially be abused. The only other source that is similar would be wind, but that is light years behind solar power. The planet is constantly drenched in the Suns rays, so why not take advantage?
3 Stocks Soaking Up Rays
Solar Power Inc. (SOPW) makes photovoltaic (PV) modules and other solar components for the U.S. markets. The company saw a 14% increase in sales on a year-over-year basis for the third quarter, reported on Nov 9. Solar Power managed to convert 23.1% of its sales revenue into gross profit, more than twice the 9.5% is saw one year ago. After the jump in sales and margins the company reported net income of $1.7 million, 70% higher than last year. EPS for the quarter was 4 cents, while the Zacks Consensus Estimate was a 1 cent loss. One year ago the company lost 3 cents per share. The earnings picture is showing a nice turn around story, going form the 3 cent loss to a projected 10 cent gain in 2010. Now, this is a thinly traded penny stock, but could provide explosive returns. Shares of SOPW are just 12 times forward earnings. If you are looking for more established companies, the next 2 may be more to your liking.
Trina Solar Ltd. (TSL ) is one of my favorites. Why? because not only is it in a hot industry, but its also in one of the hottest countries, China. Trina Solar makes solar modules from residential to industrial use. TSL reported third-quarter results on Nov 19 that showed a 67% sequential increase in revenues, to $250 million. This is down about 14% year-over-year. Additionally, the company improved its margins and produced net income of $40.1 million, up from $18.9 million last quarter. This led to earnings per share of $1.29, 54 cents better than the Zacks Consensus Estimate. Following the quarterly news and a sales agreement in China, analysts raised full-year estimates. Forecasts for 2009 are averaging $2.84, up from $1.95 over the past 2 months. The Zacks Consensus Estimate for next year is $3.76, up from $2.60. These revisions give TSL a Zacks #1 Rank and represent growth rates of 20% and 32%, respectively. Shares of TSL are exchanging hands at less than 16 times forward earnings and with a PEG ratio of 0.7 times.
Solarfun Power (SOLF) has had enormous success in just a few sessions in 2010. Solarfun, also a Chinese company, makes wafers, cells, and modules for solar use. Last quarter the company saw a year-over-year decrease in revenues, but the industry is rebounding. Revenues rose 16% on a quarter-over-quarter basis. Earnings per share were 37 cents, crushing the Zacks Consensus Estimate of 14 cents. Following the results and some bullish comments from management, analysts began raising estimates. Currently the Zacks Consensus Estimate for 2010 is 59 cents, 20 cents higher over the past 3 months. In 2008 Solarfun earned 27 cents, giving the company a 2-year growth rate of 118%. Earnings are volatile with this one, which is expected to post a 14 cent loss when it announces 2009 results. The forward P/E for Solarfun is now just 15 times. The PEG ratio, 1.2 times, leaves something to be desired but the stock is still a decent value. Not bad for a Zacks Rank #1.
Soak Up the Rays, But Use Your Sunscreen
You may notice that I did include valuations for each of these stocks. The biggest problem with investors in speculative growth stocks is that blatant disregard for value. There are a lot of solar companies out there, so take your time and pick out a good value.
Smart cars, renewable energy, carbon footprint and many other buzz words have been scattered across headlines for the past few years. While these are far from new concepts, the urgency seems to be at its peak. The bottom line is that the green movement has produced a plethora of investing opportunities.
So Where is the Green?
Just about every aspect of the "green movement" around the globe has been explored, but we continue to come back to solar energy. This does not surprise me. Here in Chicago we even have solar powered parking meters and trash bins. The difference between clean coal, natural gas, or any other alternative is that you are still using a resource. Renewable or not, it takes time and energy to continually produce and could potentially be abused. The only other source that is similar would be wind, but that is light years behind solar power. The planet is constantly drenched in the Suns rays, so why not take advantage?
3 Stocks Soaking Up Rays
Solar Power Inc. (SOPW) makes photovoltaic (PV) modules and other solar components for the U.S. markets. The company saw a 14% increase in sales on a year-over-year basis for the third quarter, reported on Nov 9. Solar Power managed to convert 23.1% of its sales revenue into gross profit, more than twice the 9.5% is saw one year ago. After the jump in sales and margins the company reported net income of $1.7 million, 70% higher than last year. EPS for the quarter was 4 cents, while the Zacks Consensus Estimate was a 1 cent loss. One year ago the company lost 3 cents per share. The earnings picture is showing a nice turn around story, going form the 3 cent loss to a projected 10 cent gain in 2010. Now, this is a thinly traded penny stock, but could provide explosive returns. Shares of SOPW are just 12 times forward earnings. If you are looking for more established companies, the next 2 may be more to your liking.
Trina Solar Ltd. (TSL ) is one of my favorites. Why? because not only is it in a hot industry, but its also in one of the hottest countries, China. Trina Solar makes solar modules from residential to industrial use. TSL reported third-quarter results on Nov 19 that showed a 67% sequential increase in revenues, to $250 million. This is down about 14% year-over-year. Additionally, the company improved its margins and produced net income of $40.1 million, up from $18.9 million last quarter. This led to earnings per share of $1.29, 54 cents better than the Zacks Consensus Estimate. Following the quarterly news and a sales agreement in China, analysts raised full-year estimates. Forecasts for 2009 are averaging $2.84, up from $1.95 over the past 2 months. The Zacks Consensus Estimate for next year is $3.76, up from $2.60. These revisions give TSL a Zacks #1 Rank and represent growth rates of 20% and 32%, respectively. Shares of TSL are exchanging hands at less than 16 times forward earnings and with a PEG ratio of 0.7 times.
Solarfun Power (SOLF) has had enormous success in just a few sessions in 2010. Solarfun, also a Chinese company, makes wafers, cells, and modules for solar use. Last quarter the company saw a year-over-year decrease in revenues, but the industry is rebounding. Revenues rose 16% on a quarter-over-quarter basis. Earnings per share were 37 cents, crushing the Zacks Consensus Estimate of 14 cents. Following the results and some bullish comments from management, analysts began raising estimates. Currently the Zacks Consensus Estimate for 2010 is 59 cents, 20 cents higher over the past 3 months. In 2008 Solarfun earned 27 cents, giving the company a 2-year growth rate of 118%. Earnings are volatile with this one, which is expected to post a 14 cent loss when it announces 2009 results. The forward P/E for Solarfun is now just 15 times. The PEG ratio, 1.2 times, leaves something to be desired but the stock is still a decent value. Not bad for a Zacks Rank #1.
Soak Up the Rays, But Use Your Sunscreen
You may notice that I did include valuations for each of these stocks. The biggest problem with investors in speculative growth stocks is that blatant disregard for value. There are a lot of solar companies out there, so take your time and pick out a good value.