Solar stocks continue to rocket higher on the back of positive press releases and high oil prices. MEMC Electronic Materials, Inc. (NYSE:WFR) reported earnings and raised their full year guidance. The stock soared on this news, jumping to a current price of $12.89, +1.26 (+10.83%). Recent positive news from First Solar, Inc. (NASDAQ:FSLR) has also kept the sector on fire.
In addition, as long as oil prices continue to hold above $90 per barrel, solar will be a solid alternative. The higher oil prices, the cheaper solar becomes as an alternative source of energy. The same thing applies to other forms of energy. These solar companies also continue to race towards making cheaper, more efficient solar cells. If they can lower costs plus have higher oil prices, sales should continue to be strong.
The one negative the solar market may have is competition. There are more and more solar companies each year. This may hurt pricing in the long term and cause a drop in margins. While this is a long term fear, it is not something these companies are seeing in a major way in the short run.
Currently, most solar companies are far too expensive to buy. First Solar for instance, has jumped from $130 to its current price of $165 in January. Buyers now, would be considered chasers and most likely be paying a premium on something they could buy cheaper on a pull back. The same thing applies for a majority of the solar stocks. There are a few that still look cheap, relative to their peers. JA Solar Holdings Co., Ltd. (NASDAQ:JASO) is a Chinese solar player that is just bouncing off its 200 moving average. In addition, Hoku Corporation (NASDAQ:HOKU) is a small cap that could have some major growth in the coming years.
As of now, it appears most solar stocks are too pricey to be serious buys at currently levels. There are a few that still look attractive as mentioned. Sharp pull backs may offer opportunities in stocks like FSLR but make sure to analyze the charts first.