Best Solar Stocks For Short-Term Gains
Despite oil being a great commodity to trade there are other options in the energy sector to make returns on. Traditional energy resources still dominate the energy market but solar energy is not to be overlooked. Renewable energy stocks are becoming more popular as climate change concerns flood headlines.
Solar Stocks To Invest In
First Solar Stock – FSLR
First Solar, Inc. has been wildly successful in the solar energy market over the past year, but not for investors. In the past 10 years, FSLR stock price has plummeted 80%, despite shares in the past 12 months being up by 33%. So it is clear that the risk factor for ‘First Solar’ is high.
FSLR continues to expand its manufacturing capabilities to ensure growth for the business. Unfortunately, the growth in business has not translated to FSLR stock price gains. Since 2013 the stock price for First Solar has remained stagnant.
The FSLR stock price has not increased because of new cheap solar panels. In 2013, the price of solar panels sold for roughly double the price that they are now. The drop in share price for First Solar can be attributed to competition from other commodity solar panels manufactured in Asia. Newer solar panels are more energy efficient than First Solar’s thin-film tech which also a downside. Due to competitors advancing in the solar panel market, First Solar decided to drop prices to remain competitive.
An advantage for First Solar is that the company has a stellar balance sheet despite margins being an issue for FSLR. The company had $1.9 billion in cash by the end of Q1 2018 accompanied by only $438 million in debt. The company’s debt is caused by new project developments.
It is worth keeping an eye on First Solar because they are experiencing high margins and solid sales. One of the major downfalls for First Solar is that is that China are stopping solar incentives, which is expected to lower solar panel sales.. dropping the FSLR stock price.
Vivint Solar Stock – VSLR
Vivint is known for being a commercial solar company that offers residential solar panel and solar energy storage products. 2017 was a great year for Vivint Solar after the stock price increased over 80% thanks to Goldman Sachs upgrading the shares to buy. This almost doubled their price target from $3.50 to $6.00 a share. Vivint shares then lost most of these gains by the end of the year, ending 2017 at 56% up from the previous year. Vivint Solar stock price is now at a 52-week high and trades at $5.40.
The solar energy market is very volitive, making investors think twice about adding a solar stock to their portfolio. An advantage for Vivint Solar is that they are changing their price model focused on cash and loan sales may make it more attractive for acquisition. Not to mention Vivint is one of the cheapest solar panel installation firms in the US.
Good Time To Invest In Solar Stocks Or Not?
In general, solar stocks have had a tough year, although long-term gains can still be made on the alternative energy market. The solar industry is being punished by U.S trade actions and China stopping many solar incentives for homes.
The start of 2018 saw the Trump administration implement tariffs on imported solar cells. Since the majority of solar cells are manufactured outside of the U.S, the price of solar panels increased drastically.
This is bad news especially for solar panel installation companies, an estimated 10,000 solar installers are to be made redundant this year. However, this may be beneficial in the long-term as companies are now looking to build solar manufacturing plants to the U.S.
For the rest of 2018 it wouldn’t be surprising if China dropped solar incentives even more which will impact the entire solar industry worldwide. China is one of the largest solar markets in the world and once demand stops for China, there will be an oversupply of panels. In turn this will slash solar panel prices as manufacturers try to shift stock.
Solar Stocks are no longer the only renewable energy option for investment. Other Renewable Stocks are becoming more popular amongst investors and consumers alike. Check out the most promising stocks of 2018 for even better returns. For beginners, read out investment beginner guide and learn how to analyze energy stocks.