5 Top Stock Picks To Play A Solar Rebound

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Includes: FSLR, LDK, STP, TSL, YGE
by: Hawkinvest

The solar stocks have been absolutely hammered this year. Some solar stocks trade for a fraction of their 52 week high. It has been a near perfect storm for this sector with everything from a general market correction, falling polysilicon prices due to excess inventory and capacity, plus concerns that cash-strapped European governments might be forced to cut many generous solar subsidy programs in the near future. However, investors that bought the solar sector lows in 2008-09, quickly made huge gains and there is some reason to believe that these stocks could be at or close to a bottom now.

A recent article by the Associated Press details why solar might be on the verge of a turnaround and states:

The high costs that for years made it impractical as a mainstream source of energy are plummeting. Real estate companies are racing to install solar panels on office buildings. Utilities are erecting large solar panel "farms" near big cities and in desolate deserts. And creative financing plans are making solar more realistic than ever for homes. Solar power installations doubled in the United States last year and are expected to double again this year. More solar energy is being planned than any other power source, including nuclear, coal, natural gas and wind.

Here are 5 stocks that could rebound off of recent lows soon:

Yingli Green Energy (NYSE:YGE) is a leading maker of solar products including photovoltaic (PV) cells, PV modules, integrated PV systems, and more. This stock was trading for over $6 per share in August and dropped by about 50% recently. The shares are trading well below book value and the price to earnings ratio is around 4.

Here are some key points for YGE:

  • Current share price: $3.76
  • The 52 week range is $2.75 to $13.59
  • Earnings estimates for 2011: 93 cents per share
  • Earnings estimates for 2012: 84 cents per share
  • Annual dividend: None
  • Book value: $9.08 per share

Trina Solar Ltd. (NYSE:TSL) one of the largest makers of photovoltaic (PV) modules worldwide. Trina is well respected as a leader in this industry and it could be one of the first stocks to rebound. This stock has started to rebound off the lows, but I would wait for earnings to come out, or a re-test of the lows before buying any shares.

Here are some key points for TSL:

  • Current share price: $7.28
  • The 52 week range is $5.28 to $31.08
  • Earnings estimates for 2011: $1.40 per share
  • Earnings estimates for 2012: $1.23 per share
  • Annual dividend: None
  • Book value: $17.67 per share

Suntech Power Holdings (NYSE:STP) is one of China's largest maker of photovoltaic (PV) products. This stock looks like an interesting speculation on dips to $2 per share or less. The stock looks cheap based on book value but earnings estimates look very weak so this is probably not the best candidate here for a rebound.

Here are some key points for STP:

  • Current share price: $2.24
  • The 52 week range is $1.70 to $10.38
  • Earnings estimates for 2011: a loss of about 31 cents per share
  • Earnings estimates for 2012: 7 cents per share
  • Annual dividend: None
  • Book value: $9.16 per share

LDK Solar (NYSE:LDK) is a leading low cost maker of solar products. This company is trading at nearly half of book value an a price to earnings ratio of less than 3. Historically buying LDK at these levels has always paid off. However, this company has debt levels that are high enough to concern many investors.

Here are some key points for LDK:

  • Current share price: $3.16
  • The 52 week range is $2.55 to $15.10
  • Earnings estimates for 2011: 19 cents per share
  • Earnings estimates for 2012: 31 cents per share
  • Annual dividend: none
  • Book value: $9.53 per share

First Solar (NASDAQ:FSLR) is a leading solar company that is based in the United States. This stock was able to close up almost 8% on Monday, and has started to rebound off recent lows. This company has good growth prospects and rarely stays this low for long. This stock has dropped about 50% since early August and the shares seem oversold. First Solar just announced that the CEO was stepping down and that caused the stock to drop significantly and it hit new 52 week lows. It might take a couple of days before this stock puts in a bottom.

Here are some key points for FSLR:

  • Current share price: $43.27
  • The 52 week range is $42.50 to $175.45
  • Earnings estimates for 2011: $8.86 per share
  • Earnings estimates for 2012: $10.10 per share
  • Annual dividend: None
  • Book value: $42.66 per share

Data is sourced from Yahoo Finance.

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

Disclaimer: No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.