Hot Solar Stocks To Watch

Rising Oil Prices Spur Investment
Oil prices are back near $90, and there is very little sign this pace slowing anytime soon. As the price of oil rises, the interest in greener companies rises as well. Solar power is one of the top green energy contenders. (Learn more in our related article Clean Or Green Technology Investing.)

If oil trends higher there could be a greater demand for shares of various alternative energy companies including those in the solar space.

The Risks
With all of the above in mind, it is important to realize that there are risks to investing in solar power. First of all, it's unlikely that individuals are going to make a shift to this technology en masse in the very near future. After all, switching to solar energy can run up a bill for homeowners in the thousands of dollars range, and in this tight economy people aren't packing a lot of disposable cash. In addition, although there are some environmental concerns, nuclear power is considered a popular alternative for power generation and the technology is unlikely to go away anytime soon.

LDK Solar
One of the aforementioned companies what could be worth a closer look LDK Solar (NYSE:LDK). The company is based in China, but has an office in California. It designs and makes solar wafers. The wafers are used to make solar cells, which in turn, are used to convert the power from the sun into electricity. Going forward, particularly if the price of more traditional forms of electrical generation is high, then the demand for the LDK's products and solar power in general could increase.

Early on in November the company reported a thrid quarter profit of $93.4 million, or 72 cents a share, which soared past analyst expectations. The company also forecast fourth-quarter revenue of $710-$750 million, which was well beyond expectations. (To find out how revenue forecasts are generated, read Great Expectations: Forecasting Sales Growth.)

In addition, LDK Solar expects to generate revenue of $2.9-3.3 billion in 2011. Analysts had been looking for $2.16 billion in sales. Long story short, many investors could start to pay attention here and send the price higher.

Bottom Line
Alternative energy companies are likely to be in greater demand in the future. And as a result, solar stocks have the potential to do quite well over time. Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!