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. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  6. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  7. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  8. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  9. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  10. Stock Analysis

    The 3 Energy Stocks You'll Wish You Bought in 2015

    Learn about the energy sector and the types of companies that operate within the sector. Find out about some of the best-performing energy stocks in 2015.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  5. Unconventional Oil

    A type of petroleum that is produced or obtained through techniques ...
  6. Green collar

    A worker who is employed in an industry in the environmental ...
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!