Smart Money Doubling Down on Solar Stocks

Smart Money Doubling Down on Solar

Shares of solar companies have taken a hit over the past few months as the price of oil continues to drop. To many, the sell off in solar names seems unfounded, since oil is not a direct competitor to solar electricity. There is also some evidence that cheaper oil could actually help the bottom line of many solar companies with cheaper transportation costs. Wall Street is not always rational, and can remain irrational for periods of time. It’s these irrational pricings that allow longer term investors to gain favorable positions, and hefty returns as earnings begin to roll in, unaffected by lower oil.

With current multiples, there are many attractive opportunities that should be considered. During The Energy Gang’s weekly podcast at Greentech Media, Stephen Lacey mentions that smart money is doubling down and buying at current levels. The players in the industry care about electricity pricing and contracts, not oil.

The best of breed companies with the ability to post profits should perform the best, as weaker companies may find themselves in the position of needing to raise additional capital. Some of the stronger companies would be SunPower, First Solar, Canadian Solar, JinkoSolar, and JA Solar. With price to earnings ratios in the low single digits for some, and price to sales ratios below .5 in some cases, it’s easy to see the upside potential that the smart money is targeting.

 

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