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Solar Stocks Look Like Very Attractive Investments

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Solar Stocks Are Finally Ready to Shine

Solar Lease CompaniesWhy invest in solar stocks now?   Haven’t stock market analysts been touting solar stocks as great investments for decades, only to have them come up short? Well, the reality is that macro-economic trends are working in favor of explosive growth for solar stocks in the years and decades ahead. The problem solar power and solar stocks have had for decades is the fact that grid electricity, the kind you buy from your local utility, has been cheaper than taking the plunge and switching to solar power for a home or business. But, that situation is quickly changing across the United States. Solar power is reaching a price point where it makes economic sense for consumers to use it instead of grid electricty. As a result, it appears that solar power and solar stocks are poised to see rapid growth over coming years.

Changing Cost Picture Is Making Solar Stocks Very Attractive Investments

As of early 2015, the average cost for retail grid electricity across the United States is nearly 12.5 cents per kilowatt hour (kWh), and is on an upward trend that is expected to continue for the foreseeable future. The reality is that electric utility company costs go up over time, and they have to pass those costs onto their customers. At the same time, solar electricity that is derived from roof-top solar panels has been coming down in price; which is also a trend that is expected to continue for the foreseeable future, as cheaper solar products flood in from overseas and installers bring costs down through economies of scale. In other words, as solar installers expand and standardize their installations, their labor and equipment costs come down.

The cost of solar power has dropped dramatically in recent years. In just the past eight years, a solar power system for a home or business has dropped from $8 per watt to $4 per watt, a 50% decrease. That is a very significant drop that makes solar power much more attractive to consumers.   Is it any wonder why there is so much optimism regarding solar stocks?

In a number of states in the United States, solar power is already cheaper than grid power, and many states are approaching cost parity between solar and grid power. Soon after parity is reached, as the trends continue, solar becomes cheaper than grid power. This cost-advantage for solar power is expected to sweep across the United States over the next two decades, providing a steady stream of customers for solar companies. This will, boost revenues and earnings, and ultimately stock prices for solar stocks.

By 2027, solar power is expected to be cheaper than traditional grid delivered power in all major metropolitan areas in the United States. Think about that. Over the next decade or so, all of the major population centers in the United States will have solar power that is cheaper than grid power. Think of all those customers and revenues that will be coming to solar companies, boosting the price of solar stocks.
A whole industry has developed that caters to home and business owners that want to go solar, but do not want to put a lot of money down upfront to install a solar power system.   There a numerous solar companies, such as SolarCity (NASDAQ: SCTY), that are willing to shoulder the high up front cost of installing a solar power system on a home or business in exchange for a rental agreement in which the building owner buys the electricity generated from the solar power system over a number of years. In many cases the cost of going solar via this solar roof renting option is zero for building owners. They just have to provide roof space for solar companies to install their panels.

Solar Stocks To Consider As Solar Business Ramps Up

First Solar
The following are some solar stocks to consider as long-term investments as solar business ramps up over the next few decades.

  • Hanergy Thin Film Power Group Limited (OTC Pink: HNGSF) is a Hong Kong based solar company involve in the manufacture of equipment used to manufacture amorphous silicon based thin-film solar photovoltaic modules. The company also manufactures and sells solar farms or rooftop power stations.
  • SunEdison, Inc. (NYSE: SUNE) provides solar energy services to the solar industry.   The company also manufactures solar modules.
  • SunPower Corporation (NASDAQ: SPWR) manufactures the most efficient solar panels available in the world. Their solar panles are 21.5 percent efficient, meaning they convert over one-fifth of the solar energy that they collect into uesable elecitricity. Its solar panels are used in residential and commercial applications, and utility customers, as well as utility-scale photovoltaic power plants.
  • First Solar, Inc. (NASDAQ: FSLR) is the benchmark for solar stocks. The company designs, manufactures, and sells solar modules. The company’s history of making profits has made it one of Wall Street’s favorite solar stocks.
  • Canadian Solar (NASDAQ: CSIQ) is a top solar cell supplier. Although the company is named Canadian Solar, it is actually a China based solar company that supplies inexpensive solar cells.

Solar ETFs To Spread An Investment Among Numerous Solar Stocks

The following are two solar exchange traded funds (ETFs) to consider as long-term investments in solar.   The advantage of using exchange traded funds (ETFs) to invest in solar stocks is that risk associated with investing is spread out among numerous solar companies.

  • Guggenheim Solar ETF (NYSE: TAN) tracks the performance of the MAC Global Solar Energy Index, which is comprised of about twenty-five solar companies at any given time.
  • Market Vectors Solar Energy ETF (NYSE: KWT) is designed to mimic the Market Vectors Global Solar Energy Index, which is made up of companies that generate at least 50% of their revenues from solar power businesses.

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