Energy Investors: 7 Fast Growing Solar Hardware Stocks in Today's Market

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Includes: FSLR, JASO, LDK, SPWR, STP, TSL, YGE
by: Investment Underground

By Roger Choudhury

Given higher oil prices in the short-term as well as the long run, solar-themed companies are more competitive. We searched for the fastest growing solar hardware companies by earnings and revenue growth relative to their peers. These are the outperformers:

First Solar (NASDAQ:FSLR) made $2.56 billion in sales with $664.2 million passing on as profits in 2010, which was an increase of 24% and 3.7% from 2009, respectively. The EBT margin was 29.7%, and the return on invested capital was 21%. However, in 2009, the EBT margin and ROIC were 33.2% and 28.2%, respectively. EPS grew 1.99% to $7.68, so shares trade with a P/E of 20.2. The company gives guidance of EPS to be $9.25 to $9.75 in 2011, which is a range of growth from 20.4% to 26.95%.

First Solar is the world’s largest manufacturer of thin film photovoltaic modules with operations stretching from the U.S. to Europe to the Far East. The company will present at the Morgan Stanley Technology Conference in San Francisco on March 1, and the UBS Alternative Energy Conference in New York City on March 8.

Trina Solar (NYSE:TSL) had revenues of $1.85 billion and profits of $311.4 million in 2010. These are respective increases of 119.8% and 223.6% from 2009 figures. The EBT margin was 19.35% in 2010, but 14.47% in 2009. ROIC came in at 19.1%, after posting 9.33% in 2009. EPS grew from $1.69 to $4.18. Keep in mind that there was a 2:1 share split.

For Q1 2011, the company expects its shipment volume for photovoltaic (PV) modules to be slightly higher than that in Q4 2010. For the full year of 2011, the company expects total PV module shipments between 1.75 GW to 1.80 GW, representing an increase of 65.6% to 70.3% from 2010. The company also expects significant market share expansion in the U.S., Japan, China and India.

Trina Solar is a leading integrated manufacturer of solar photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules. (Get our opinion on rare earth materials used in Trina products here.)

LDK Solar (NYSE:LDK) generated $1.49 billion in revenues and $57 million in profits in the 12 months ending in September 2010. Compared to FY 2009, these are increases of 36.5% in revenues and a $291 million increase in profits into positive territory. The EBT margin and ROIC for these 12 months are 5.3% and 1.99%, respectively. In FY 2009, they were -23.2% and -11.68%. EPS is still negative at -$1.85.

The company gave guidance for Q4 2010 with revenues of $710 to $750 million. For FY 2011, LDK Solar expects revenues of $3.5 to $3.7 billion, wafer shipments of 2.7 to 2.9 gigawatts (GW), module shipments of 800 MW to 900 MW, in-house polysilicon production of 10,000 MT and 11,000 MT, and in-house cell production between 500 MW and 600 MW.

Earlier this year, LDK Solar and Solar Power (OTCQB:SOPW) announced that LDK Solar agreed to acquire a 70% interest in Solar Power for approximately $33 million. The transaction enables the acceleration of the development of Solar Power’s project pipeline, which primarily consists of utility-scale power plants and commercial/industrial distributed generation systems. This should eventually provide LDK Solar with enhanced downstream benefit to its vertical integration model through module supply for large scale projects.

LDK Solar is a leading vertically integrated manufacturer of photovoltaic products and the world's largest producer of multicrystalline wafers. LDK Solar manufactures polysilicon, mono and multicrystalline ingots, wafers, modules and cells. Its headquarters and manufacturing facilities are located in Hi-Tech Industrial Park, Xinyu City, Jiangxi Province, in the People's Republic of China. The office in the United States is located in Sunnyvale, California.

Yingli Green Energy (NYSE:YGE) made 4.06 billion RMB ($616 million) in revenues and 666.6 RMB ($101 million) in profits. When compared to 2009, that is an increase of 160.6% in revenues, and an increase of 782 million RMB ($118.9 million) in profits from negative territory. The EBT margin in 2010 was 18.59% versus -6.68% in 2009. ROIC was 5.76% in 2010, but -5.07% in 2009. Earnings per share is $0.52, which is a sharp increase from - $3.83, a year back. Currently, the P/E multiple is 20.7.

In 2010, 80% of sales were made by European clients. Additionally, the company has been selected to supply ~70% of the total amount of 272 MW PV projects under the Golden Sun Program, which is sponsored by the Ministry of Finance of China, and received an advance payment of 35% of the total purchase price in December 2010. The majority of the shipments are scheduled to be delivered in the second half of 2011. In the grand scheme of things, Yingli Green Energy expects its PV module shipment target to be in the range of 1,700 MW to 1,750 MW for 2011, which represents an increase of 60.1% to 64.8% compared to FY 2010.

Suntech Power (NYSE:STP) made $2.27 billion in sales, but a loss of $80 million through the trailing 12 months. This is an increase of 34% from FY 2009. The EBT margin was 0.61% with a ROIC of -2.59%. In FY 2009, those figures were 5.4% and 2.86%, respectively. EPS is now negative, after 7 consecutive years of being positive.

There is some room for optimism as Suntech reported its highest quarterly revenues in its history in Q3 2010: $743.7 million, which is +25.3% from Q3 2009. The company will announce 2010 results on Tuesday, March 8.

The company is one of the leading solar energy companies in the world as measured by production output. It designs, develops, manufactures and markets a variety of photovoltaic cells and modules. Products are sold worldwide, including in Germany, Italy, the U.S., China, South Korea, Spain, the Middle East, Australia and Japan.

SunPower (SPWRA) generated $2.2 billion in revenues and $178.7 million in profits in 2010, which were respective increases of 45.5% and 449.5% from 2009. The 2010 EBT margin was 8.26%, but the 2009 figure was 2.9%. ROIC was 9.49% in 2010, compared to 1.74% in 2009. EPS went from $0.35 to $1.75 in 2010, implying a P/E of 10. The company gives a range of $2.00 to $2.20 for EPS in 2011, which is a growth of between 14.2% to 25.7%.

Tom Werner, SunPower CEO, said, “Operationally, we successfully integrated our acquisition of SunRay Renewable Ventures which significantly contributed to recognizing revenue on more than 100 megawatts (MW) of power plants in Europe in 2010. We also increased our global dealer network to 1,500 partners and are on our way to 2,000 partners this year. In addition, we commenced operations of our Fab 3 Malaysian joint venture and we are on track to produce more than a third of our solar cells at Fab 3 this year. Due to the success of our accelerated cost reduction roadmap, we are on plan to achieve our efficiency-adjusted panel cost goal of $1.08 per watt in the fourth quarter of 2011. Given our strong 2010 performance, robust downstream demand and strong visibility, we are confident in our ability to deliver on our improved 2011 plan.”

JA Solar (NASDAQ:JASO) made 3.85 billion RMB ($584.2 million) in revenues and 783.3 million RMB ($118.6 million) in profits. These are 137% and 476.5% respective increases from 2009. The EBT margin is 22.8% in 2010, but -3.19% in 2009. In 2010, ROIC is 12.39%, after a poor -1.92% in 2009. EPS is $0.59, which is a P/E multiple of 12.4.

The company currently expects total cell and module shipments to exceed 2.2GW in 2011, representing an increase of ~50% versus 2010. Module shipments are expected to be ~500MW to 600MW. As of February 22, sales contracts for 2011 delivery, amount to more than 2 GW, representing approximately 90% of the company's expected shipments for 2011. JA Solar is one of the world's largest manufacturers of high-performance solar cells and solar power products. In addition, according to reports published by SolarBuzz and IMS Research in December 2010, JA Solar ranked first globally in terms of solar cells produced and shipped in Q3 2010.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.