Solar stocks have a lot of opportunity, but they also carry risks as many states have cut back on incentives to go solar. The industry is volatile as a result, so short-term investments are always risky business for investors.
Long-term outlook for solar in undeniable, and companies that hold distinct competitive advantage have a better long-term outlook than their competitors.
These two companies have an advantage in the solar industry going into August:
1. First Solar (FSLR)
First Solar suffered headwinds which caused the company’s stock to fall in recent quarters, but the company’s technology allows it to maintain a bright future. The company’s solar panels aren’t the industry’s most efficient, but their introduction of thin film panels will be able to compete with most China-sourced panels.
The thin panels are more efficient than the low-cost panels from China, and they’re able to withstand harsher climates.
The company is slated to release their Q2 2016 earnings after the closing bell on Thursday. Analysts expect declining metrics following a miss of $100 million in sales during March due to project timing issues.
Long-term, the company’s primary dealings with utility-scale solar and new panels are expected to offer high returns. International opportunities are open to the company thanks to their new thin solar panels.
2. SunPower (SPWR)
SunPower offers the industry’s most efficient solar panels allowing the company to lower the cost of solar energy production due to less land being required for generation. Lower costs across the board compared to the competition allow SunPower a distinct advantage in the industry.
The company also offers cells in all levels of the industry from power plants to handheld devices.
A worry for some investors is the company’s $1.7 billion in debt, but the debt is funding $1.2 billion in assets that will come to fruition in the coming years. The company also maintains $623.3 million in cash on its balance sheets.
A large cash holding and over $1 billion in projects in the company’s pipeline along with the most efficient solar panels in the world make SunPower a great long-term investment.
