Solar stocks have been on a tear in 2013 with improving industry fundamentals leading to a very strong rally. One of the main reasons for the stock upsurge has been the depressed valuations of the solar stocks. As the industry reeled from massive losses in the last two years, stocks went into a tailspin with many stocks trading for values as low as 0.2 P/B. With modules prices increasing and demand surging from Asia, solar stocks have made a sharp comeback. However, it will not be easy for investors to make the same spectacular returns now as the valuations have become more reasonable. Some stocks are trading on the higher side in my view. Investing inthe solar sector is not easy as the industry is still in the nascent stage. Investing in Suntech (STP) or LDK Solar (LDK) would have been a very bad idea last year. I had warned investors about investing in the "zombie" like companies earlier. But it looks like ReneSola (NYSE:SOL) has still got more potential for appreciation. The stock has not rallied as much as the solar panel stocks such as Trina Solar (TSL), Jinko Solar (JKS) etc. The reason is that the company still gets a lot of revenue from the sale of polysilicon and wafers. The upstream segment has not seen the same price increase as solar panels in 2013, despite operating at near capacity. I think that prices of the upstream segment will start to increase as well and this should benefit ReneSola more than others.
Why ReneSola is Still a Good Bet
i) Upstream Segment should see a Price Increase
ReneSola is one of the lowest cost producers of polysilicon and solar wafers in the industry. The company has managed to substantially reduce its polysilicon cost over time and has reached a
