Solar energy has been one of the most volatile investment themes of this decade. The vast swings solar stocks have seen are nothing new to nascent industries that investors believe show promise, as was seen in the tech bubble in the late 1990s and other sectors throughout history. The bottom line is that solar is being deployed on a scale that would have been hard to imagine just 10 years ago, and it remains a growth sector for the foreseeable future.
Investments in solar cover a wide range of company types along different levels of the supply chain, utilizing differing technologies. Also, many believe that there is an overabundance of solar manufacturers, that supply outstrips demand. Picking the right companies in this type of competitive environment is especially critical to long-term investment success.
Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link. This report, Invest Solar: Solar Energy Investment Opportunities will review the history of solar, help investors understand the types of solar companies; outline the investment choices available, and show how to pick companies most likely be the winners.
Types of Solar Companies
Investors who want to take part in solar energy need to know what they are investing in. For example, there are several important sectors within the solar industry. Also, companies reap different amounts of their income from solar operations.
Equipment Manufacturers for Solar Industry
Companies in this category support different aspects of solar production. This ranges from selling factory equipment used to make solar cells, to manufacturing films that cover solar panels, to building power inverters specific to solar cells. This is a strong category because of its viable investment story, since these are the companies supplying the nuts and bolts needed for solar producers. No matter which of the many photovoltaic companies wins out in the end, they will all require machinery and materials. It’s like the California gold rush, where the only people who consistently made money were the ones who sold picks and shovels.
The specific solar companies in this category are outlined in Invest Solar: Solar Energy Investment Opportunities. Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link.
These are the type of companies most people think about when they want to invest in solar. Though all these companies are in the same sector, their businesses can be quite different.
There is an important distinction in the kind of solar cell that a company produces, as the solar industry is basically divided between more traditional silicon-based solar cells (monosilicon and polysilicon), and those using “Thin Film” technologies. Traditional silicon-based cells are more efficient in converting sunlight to electricity, but are more expensive to produce. Most Chinese solar companies fit into this model. Thin film panels lose out in efficiency, but gain in far reduced cost of production.
Distribution, Installation and Service Companies
A great way to strategically invest in the solar industry is to focus on companies involved in distribution, installation and service of solar arrays. Whether they be smaller rooftop instillations, or vast utility-scale projects, there is no doubt that the number of instillations will continue to grow.
Unified Solar Companies
The three main companies that have a unified solar business model are SolarCity Corp (SCTY), SunPower Corp (SPWR) and SunEdison Inc (SUNE). They have operations that run straight through all sectors of the solar industry, from the manufacture of solar panels to rooftop and utility-scale installation to selling power to finance. These solar stocks, however, differ greatly in their execution. Invest Solar shows how to pick the right solar energy companies in this varied field.
Utility stocks can create a good balance to a portfolio. They offer a relatively stable stock price that tends to hold up well in economic downturns, since electricity is a staple commodity that will always get used. They also offer attractive dividends, important to income investors. It is difficult, however, to do a pure solar play within utilities since solar currently makes up only a small part of their energy portfolios.
For a complete list of specific solar utilities download Invest Solar: Solar Energy Investment Opportunities. Just follow this link.
A YieldCo is a company that owns the cash flow from renewable energy projects, and then pass them on to shareholders as dividends. There are about half a dozen YieldCo’s investors can take advantage of. Yields for these stocks are very attractive, in the 3.5% to 5.5% range.
A Solar (REIT) is a security that invests directly in real estate. Investors can buy and sell shares of the REIT like a stock. Solar REITs take this concept and invest in solar properties. REITs are similar to YieldCo’s, but REITs have a more favorable tax treatment.
Components, Peripherals and Specialty Companies
This category contains a raft of companies that directly serve the solar industry. For example, AES Corporation (AES) manufactures inverters that are necessary to feed photovoltaics into the grid.
Other Solar Investment Types
Non-traditional type of solar investments include Master Limited Partnerships and Solar Crowdfunding. For details on these two solar investment options read Invest Solar: Solar Energy Investment Opportunities. Just follow this link.
Solar Investment Strategies
There are three significant themes going forward that should be watched by solar investors: installation, storage and yield. Installation is still a growth industry, with installs in 2015 forcast to be almost double that of the previous year.
Due to the intermititant nature of photovoltaics, energy storage is essential to building a robust, resilient electric grid.
Because of the advent of YieldCo’s and other dividend investment choices, renewable energy investors have a number of good options to create meaningful yield in a portfolio.
For a full discussion ot these strategies, please download Invest Solar: Solar Energy Investment Opportunities. Get the full FREE Solar Report in your inbox today! Just follow this link.
Continued robust growth in solar is all but inevitable.Bloomberg New Energy Finance expects that $3.7 trillion will be spent on solar between 2015 and 2040. I believe solar will prove an excellent long-term investment if you are in the right companies. Join the many Roen Financial Report subscribers that use this financial website to keep up with the dynamic alternative energy industry, and learn how to find the best investments.
Remember to always consult with your investment professional before making important financial decisions.