Solar Stocks a good investment

Source: Bidness Etc

Solar Stocks have been largely applauded by the solar investors in 2013 as they have proved to be a very profitable investment. By the end of third quarter of 2013, individual solar stocks have been up by 50% whereas they have shown another 15% growth in last quarter. This makes it a 60% annualized return on an average solar stock.

The rise in solar stock performance in 2013 has been associated with number of factors which range from investment in the solar energy sector to the individual performance of a particular Solar Company. Solar energy systems leasing company, SolarCity, had been recently financed $500 million by Goldman Sachs Group Inc. (GS) which it has planned to use for generating 110 Megawatts Solar power projects. Chinese Solar Industry has been exposed to various duties charged for antidumping by the European Union, however this has been settled now and there would be quotas use for Chinese solar panels instead of tariffs. The earnings for Chinese Solar companies have also been improved because of wider margins and improved prices of solar panels.

It is believed that Solar stocks will keep outperforming in the long run because it is expected that photovoltaic production cost will keep declining whereas solar financing options will be enhanced, enabling installation of solar products on a small scale, for example, and household utility. The Solar technologies are maturing which keeps the segment strong. These are the factors which makes the solar stocks a lucrative investment for the investors seeking long-term profitability.

However solar industry has some setbacks too as it could remain volatile for some reasons, such as electric prices are falling due to energy generated from natural gases, which are low cost production. Moreover it is most likely Chinese photovoltaic producers would be consolidated which could limit the growth. Solar sector is also affected from the Government’s complex support for renewable energy.

For making Solar stock a most yielding investment, it is suggested to create a diverse portfolio, which includes various stocks from the sector differentiating on size, location, technology, etc.