SolarCity, SunEdison, First Solar Are Sky-High but That Could End Tomorrow
NEW YORK (TheStreet) -- U.S. solar stocks are on a roll. Over the last 52 weeks, shares in First Solar
But these gains could be given back over the next few months. Some of these stocks have already begun to stall or roll back to the down side. This doesn't mean renewable energy itself is "a gamble," as a recent story on German energy insists. Cost parity between fossil and renewable energy -- without incentives -- is coming to many areas, and low-cost energy is the name of the game.
But will U.S. companies win that game? And how should investors play it?
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First let's look at First Solar. Its results are profoundly impacted by its ability to create and sell off utility-scaled solar projects. It booked sales of $950 million for the March quarter, but just $544 million for June. Profitability nearly disappeared, from $112 million in the March quarter down to $4.53 million for June.
First Solar uses cadmium telluride (CdTe) rather than silicon-based photovoltaics. It has driven the yield on such cells to as high as 21%. But CdTe is a mature technology. Efficiency gains are slowing. Cadmium is toxic and tellurium may be increasingly rare. First Solar's ability to compete on a cost-per-kilowatt basis with other solar technologies is subject to question.
Or consider SunEdison. Before changing its name to SunEdison, MEMC Electronic Materials (the first M stood for Monsanto
But there's hope for SunEdison in a solar plant operator purchased in 2009. It has a joint venture with Samsung
SolarCity's rise has two reasons behind it, Elon and Musk. Musk's cousins, Lyndon and Peter Rive, run the company. SolarCity announced recently it would buy Silevo, which makes high-yielding photovoltaic systems, and produce those systems at a plant near Buffalo, NY. It was Musk who took the questions, and the stock zoomed upward on the news.
Financially there is little to recommend SolarCity, despite Musk's allure from his Tesla
This is to be expected. SolarCity's business is financing homeowners' installations of solar power. As with a bank, money goes out fast and comes back slow. TheStreet also rates SolarCity as a sell.
Up next: SunPower.