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Analysis: Solar Stocks Have Reached A Bottom

|Includes: CSIQ, First Solar, Inc. (FSLR), TSL, USO

The solar sector is finally participating in a rally. Throughout 2011, the solar stocks have fallen, even during great market moves to the upside. The obvious issue has been margin pressure and the problems in Europe. Europe has long been one of the biggest buyers of solar energy. Austerity measures have meant major cutbacks in solar installations. In addition, overproduction of solar cells from China have caused major price cuts. Prices of solar panels have fallen off a cliff in 2011 and amazing earnings growth has turned into major losses for many players. While the fundamentals look gloomy, it appears a bottom is in.

Solar stocks are running higher today headed by First Solar, Inc. (NASDAQ:FSLR) . First Solar is trading at $46.98, +3.17 ($7.24%). Other smaller solar companies have seen major moves in the last few days. One of the highlights would be Canadian Solar Inc. (NASDAQ:CSIQ). Just last week the stock traded as low as $2.07. Today it hit a high of $2.93

Another factor that should help solar stocks rebound is oil. Crude oil is trading above $100 per barrel. The United States Oil Fund LP (ETF) (NYSEARCA:USO) is trading at $38.86, +0.31 (+0.80%). As oil holds over $100, at current prices, solar is an amazing alternative energy. Demand will increase. The increase in demand should shoot solar prices slightly higher which in turn will bring profits back to the sector.  Other solar stocks to watch are SUNPOWER CORP CL A (NASDAQ:SPWR) and Trina Solar Limited (ADR) (NYSE:TSL). 

Gareth Soloway