Hot Solar Stocks To Watch

By Investopedia Staff | January 31, 2012 AAA

Solar power is not a new concept. For centuries homebuilders purposely constructed and positioned houses to take in sunlight and to warm the occupants. Fast forward to the 21st century and now whole homes are being outfitted with panels, cells and other gadgets that convert the sun's rays into electricity.

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The good news is that investors have the ability to get in on this technology as well. The following is a list of companies that provide various types of solar power goods or services: (To learn how the industry works and how to spot the winners before you buy in to the hype, read Spotlight On The Solar Industry.)

Top Solar Picks


Company Market
Capitalization
China Sunergy
(Nasdaq:CSUN)
31.78M
LDK Solar
(NYSE:LDK)
636.66M
Yingli Green Energy
(NYSE:YGE)
669.16M

Rising Oil Prices Spur Investment
Oil prices are near $100, 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.

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.

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