Trend: High oil prices are boosting the demand for solar energy — and the stocks of the industry leaders.
In an article on MarketWatch, Timothy Lutts, president of Cabot Heritage, likes the potential growth of four solar energy stocks as the price of oil increases. Excerpts below.
The fact is, the solar energy that hits the earth in one minute is sufficient to supply all our energy demands for an entire year; the trick is harnessing that energy. An increasing number of public companies are doing it, however, and as the technology improves rapidly in this industry, and economies of scale kick in, the cost per watt continues to fall.In some sunny locations, the cost of solar is nearing parity with the cost of traditional fossil-fuel electricity. And it's pollution-free!There are over a dozen young stocks to choose from in this space, but the leaders today are First Solar (FSLR), JA Solar (JASO), SunPower (SPWR),and Yingli Green Energy (YGE).These are growth investments of the first order. Every one of them is growing revenues at a triple-digit rate. (That's proven to be one of our most successful stock-picking criteria through the years.) Every one of them is a profitable company. And every one is being accumulated by institutional investors who want to get their foot in the door of the next big thing.Admittedly, these stocks are expensive when looked at from a static valuation perspective. But when you consider the growth potential, these valuations make sense.First Solar, based in Phoenix, is the leading provider of third-generation "thin-film" solar cells, which means it's far less dependent on increasingly expensive silicon for its products.SunPower, based in San Jose, Calif., makes an aesthetically attractive all-black solar cell for both residential and commercial installations and is building new manufacturing plants in Malaysia to increase capacity.JA Solar, nominally from the Cayman Islands but actually operating in China, is a specialist. It makes solar cells, but then sells them to other manufacturers who incorporate them into finished power-generating products.Yingli Green Energy, also in China, is vertically integrated, and produces complete systems for home, business and industry.All four have strong charts today and all four are recommended for growth-oriented investors who know how to manage risk.