Now that earnings have been released, let's take a grounded-in-reality look at this innovative solar company.

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SolarCity's earnings results were mixed, showing steady revenues, but also a net loss for the first quarter of 2013 (chart above). It's disconcerting that net income has been negative for the past four quarters, and on a per share basis, the most recent losses were 28% greater than analyst expectations. Revenues, on the other hand, came in ahead of analyst estimates, but just barely.

If SolarCity is to make it as a company, it needs to successfully implement a business plan that grows its customer base in a big way. It therefore makes sense to look at data relating to its clients. The chart below shows data for each of the past four years, and compares it to the most recent quarter.

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Customer growth remains robust for the first quarter of 2013. 2012 was off the charts, with SolarCity adding on 30,950 new clients. The first three months of 2013 added close to a quarter of that number, which is good news for FY 2013 projections.

Total revenue per customer is declining steadily, but that is to be expected as the number of customers dramatically increases. What is occurring though (and what we want to see) is that the net loss per customer is steadily decreasing. It has changed from a low of around $5,000 in 2010 and 2011, to about $500 in the most recent quarter. If SolarCity can keep that trend going then the company will soon be in the black again. Another important metric is the acquisition cost per customer, which has remained steady at 2012 levels.

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I also find it encouraging that SolarCity's debt levels remain reasonable, just about the same as 2012 levels. It is important to understand that in many ways SolarCity is a financial company, crafting and offering creative finance options to allow clients to get solar done with minimal up-front costs. As with other financial firms, debt is a big part of SolarCity's business, so it must be analyzed under that spotlight.

Though I still view SolarCity as an investment for the speculative portion of a portfolio, the long-term prospects for this company are very compelling. For example, SolarCity recently announced its biggest project to date-a 24 megawatt, 6,500 Homes in Project at Navy and Marine Bases in Hawaii. Investors that are willing to ride the SCTY stock price rollercoaster are likely to be rewarded in the long term.

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

SunPower Corporation (SPWR) is being added as a result of its strong price momentum and upwards earnings estimate revisions. SPWR is a vertically integrated California-based solar company involved in the manufacture, installation and service of photovoltaics. Its stock has more than tripled in price on large volume since its December lows, up 260%! Sales have been strong, and the stock price is still below levels of around two years ago. We still see upside potential from here. It should be noted, however, that the Roen Financial Report considers SPWR a speculative investment since it has high volatility, and is still in negative earnings territory.

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CLARCOR Inc. (CLC) provides air and water filtration products worldwide. This sizeable company has over $1 billion in sales, and over 5,000 employees. It has high quality financials with growing dividends, steady earnings and low debt. CLC is being added this month because it is reasonably priced, trading in the mid-range of what the Roen Financial Report calculates to be fair value.

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Kadant Inc. (KAI), a small cap company that supplies equipment for the papermaking and paper recycling industries, is being dropped from the Paradigm Portfolio this month. We still consider this a high-quality company, but it looks overpriced at these levels. We will continue to track KAI for reentry into the portfolio if its price becomes more attractive.

The objective of the Paradigm Portfolio is to pick the highest quality companies that are considered best positioned to benefit from the economic paradigm shift away from foreign oil and polluting coal and towards cleaner energy alternatives. These are leadership companies that play an important role in redefining our energy future.

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

STOCK ALERT SECTORS

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

STOCK ALERT SECTORS

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

STOCK ALERT SECTORS

IMPORTANT INFORMATION

Individuals involved with the Roen Financial Report and Swiftwood Press LLC do not own or control shares of any companies mentioned in this article. It is also possible that individuals may own or control shares of one or more of the underlying securities contained in the Mutual Funds or Exchange Traded Funds mentioned in this article. Any advice and/or recommendations made in this article are of a general nature and are not to be considered specific investment advice. Individuals should seek advice from their investment professional before making any important financial decisions. See Terms of Use for more information.

Remember to always consult with your investment professional before making important financial decisions.

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

Mutual Funds (MFs)

All of the alternative energy MFs were up handsomely in the past three months. The biggest gainer was Firsthand Alternative Energy (ALTEX), up 27.3% for the quarter, which also moved ahead in its ranking. Even the lowest three-month gainer, Brown Advisory Winslow Sustainability Fund (BAWAX), was up an impressive 9.2%.

One-year returns were more variable, ranging from a gain of 18.0% for AWATX, to a loss of 11.7% for ALTEX. This has much to do with the solar holdings in these funds. For example, companies in ALTEX such as JA Solar (JASO), Yingli Green Energy (YGE) and JinkoSolar (JKS) have had outstanding quarterly returns, but are still down substantially for the year.

Exchange Traded Funds (ETFs)

The average three-month return remains high for alternative energy ETFs, at 13.6%. The notable exception is GRN, which has suffered from the steep drop in carbon prices. Two solar ETFs have done the best in the past three months, TAN and KWT. Both these funds, though, have taken a beating over the longer term, as can be seen in their one-year and three-year returns.

PowerShares Global Wind Energy Portfolio (PWND) is no longer trading, and closed out at $6.23/share on February 26th. What happened was that the amount of assets under management were too low for the company to justify keeping the fund open. This is not an uncommon occurrence in the over-crowded ETF world. KWT, GRN and First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID) are also on watch for having the potential to be shut down and liquidated. This is a good reminder that care should be taken, as many alternative energy investments can be highly speculative on both the upside and the downside.

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