by Scott A. Mathews
Events in Japan have put the nuclear industry into a panic. Energy supply must come from somewhere, however, with a flight to safety underway-- solar is poised to be a prime beneficiary of events in Japan. Like capital, energy demand is fungible-- so look to see more capital ending up in solar contracts moving forward.
The industry, already buoyed by technological advances that have made it far more cost effective over the past decade, has firmly entrenched itself in the world’s fastest growing economies. Safe energy production, possible carbon constraints, popular adoption in some of the world’s fastest growing countries and an enthusiasm for green are all tailwinds that add up for these solar names.
First Solar (NASDAQ:FSLR): The world’s largest solar company, capitalized at over $12 billion, First Solar is the only major panel maker to not employ silicon chips, instead using cadmium telluride. Its inimitable cost savings in production have brought First Solar to the top of its peer group. Four days since the earthquake in Japan, the stock’s price had jumped from $140 to nearly $160.
Suntech (NYSE:STP): Also riding a four-day spike in stock prices, Suntech rode the market up over 10% before the event-driven rally was tempered by rational restraint and some likely profit-taking. Suntech is amongst the faces of China’s burgeoning solar industry, and from this perspective alone it is levered to a very positive growth trend. That said, many analysts estimate that it is currently trading significantly above fair value. Chinese stocks have tended to demonstrate a penchant for enthusiasm bubbles that characterize pretty much anything Chinese for the past decade.
Yingli (NYSE:YGE): Yingli, another major Chinese solar panel producer, also benefits from the lower production costs that have brought it and others quickly out of obscurity and onto the world solar scene. Germany is its primary market, which could provide it with an added boost depending on how Chancellor Merkel decides to move forward with Germany’s energy policy realignment.
Q-Cells (OTCPK:QCLSF): This German manufacturer of photovoltaic devices with an American office in San Francisco enjoyed the same bounce as its peers. It has a market capitalization of $270 million and recently signed an 83 MW Solar Cell agreement with SunPower, according to its website.
SunPower (SPWRA): Trading under the fair value estimate of analysts that have placed that number near $19/share, SunPower is a large player with $1.5 billion in capitalization in this fast evolving sector. SunPower has faced stiff competition from low-cost competition, most notably from Chinese competitors, but has aggressively moved to cut costs. It may be able to close the gap-- it may or it may not adopt a less linear strategy to circle round its competitive challenges.
For more information, please do see the 7 Nuclear Stocks that Could Suffer from Japan's Fallout.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.