The economy is in the doldrums and one of the sectors being dragged down with it are the solar techs. A flurry of negative data came out of the U.S. during the Aug 22-28 week. It started with the disappointing existing home sales report, coming in at 3.83M against expectations of 4.68M and down 27% from the previous month. In addition, core durable goods and new home sales data were well below expectations, coming in at -3.8% and 276K respectively.

IN PICTURES: 10 Tips For The Successful Long-Term Investor

Solar, as a long-term play, has a mountain of potential. Solar technology, in particular, manufacturing processes and cell efficiencies, continue to consistently improve. Researchers at the Centre for Solar Energy and Hydrogen Research just recently reported setting a new world record for CIGS (a form of thin-film) cell efficiency, reaching a top efficiency of 20.3%. Efficiency is simply the amount of light energy being converted to electrical energy.

For comparison, in expensive polycrystalline and the more expensive monocrystalline cells, efficiency can range from 12-20% and 15-27%, respectively. The one major drawback of thin-film solar cells has always been their low efficiency relative to silicon cells, but the tides could be turning. It will be quite some time before CIGS cells with efficiencies at 20% will be commercially available, but the future looks promising for the cheaper alternative to crystalline silicon. Experts expect commercial CIGS thin-film cells to present major competition to crystalline silicon cells within the next three years.

Let's see how some of the major solar producers have done in the last year:

Ticker Company Performance (Year) Market Cap P/E Shares Float Float Short
Nasdaq:SPWRA SunPower Corporation -57.64% 979.93 38.58 96.99 16.75%
NYSE:STP Suntech Power Holdings Co. Ltd. -53.70% 1387.15 13.28 178.02 7.41%
NYSE:YGE Yingli Green Energy Holding Co. Ltd. -33.71% 1556.59 26.2 24.63 19.89%
NYSE:TSL Trina Solar Ltd. -10.74% 1680.04 10.34 69.74 6.14%
NYSE:LDK LDK Solar Co., Ltd. -7.28% 854.23 11.61 130.78 8.17%
Nasdaq:FSLR First Solar, Inc. -6.44% 10837.47 17.43 54.29 19.62%
Data obtained as of 08/26/10

As you can see from the list, many of the major solar companies fell heavily in the past year. The worst performing solar company on our list was SunPower Corporation, down 57.6%. And at the bottom of the list is who else but the thin-film cell juggernaut, First Solar.

It's not surprising that First Solar has fared well relative to the sector. The company has superb margins and is a leader in thin-film cells, which is the fastest growing segment in the solar industry. In addition, according to their second quarter report, First Solar continued their cost reducing ways, shaving $0.05 off the manufacturing cost of Photovoltaic (PV) modules to $0.76/watt.

The Bottom Line
Buyers of solar cells look for two main things, low price and high efficiency. As technology continues to improve, it appears as though thin-film cells will strike a good balance between these two needs. And the company that currently dominates the market in thin-film PV cells may be a good place to start if you're looking for a long-term play on the solar market. (For related reading, take a look at Spotlight On The Solar Industry.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    How Toyota Succeeds at Home and Abroad (TM)

    Japan's biggest car manufacturer is also one of North America's biggest, delighting shareholders with its high profit margins.
  2. Stock Analysis

    The Top 5 Oil and Gas Penny Stocks for 2016 (XCO, CHK)

    Learn more about the oil and gas industry outlook, and discover the top five oil and gas penny stocks investors should consider for 2016.
  3. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  4. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  5. Stock Analysis

    3 Volatile U.S. Industries to Exploit in 2016 (VRX, IBB)

    Read about volatile sectors in the stock market that may provide opportunities for investors in 2016, including energy, mining and biotechnology.
  6. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  7. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  8. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  9. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  10. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
Trading Center