Investing in Alternative Energy Stocks: Five Solar Power Winners ...

Five Solar Stocks to Power Your Portfolio

First Solar Inc. (Nasdaq: FSLR): Perhaps no single solar power company is as beaten down as First Solar.

Just four short years ago, FSLR peaked at a high of $311.14. Since those halcyon days, FSLR has shed nearly 95% of its value. It's currently trading below $18.

However, even after a surprise $400 million loss in Q1/2012, there are a few reasons to like First Solar.

New CEO James Hughes, an internal hire, has sufficient industry experience to guide the company toward the goals of its new five-year strategy. First Solar's existing 2.7GW project pipeline should provide sufficient earnings to survive while the company shifts to non-subsidized utility projects, which offer cost, scale, and efficiency advantages.

In fact, FSLR recently raised 2012 EPS due to cost savings from recent restructuring, which should help the stock in the short term.

Long term, First Solar is shifting its focus from government-subsidized Western markets to places like India, where solar electricity is competitively priced with more traditional sources. What's more, First Solar's thin-film panels have a technological advantage where heat and humidity tend to limit the effectiveness of Chinese-manufactured silicon panels.

First Solar's current valuation makes it an attractive takeover target for a larger company, and General Electric Co. (NYSE: GE) has been mentioned as a possible suitor.

SunPower Corp. (Nasdaq: SPWR): SunPower saw its 1Q/2012 revenues jump 9% over the same period in 2011, to $494 million, which exceeded analyst expectations. Net income clocked in at ($74 million), or a loss of $0.67 per share. Cash and cash equivalents dropped 54% to $302 million as the company reduced its debt by 34% from $978 million to $639 million.

SunPower's cost per watt is high at $1.08, but management aims to bring it down to $0.86 by the end of 2012. On April 16, the company announced plans to shutter its oldest factory and shift production to facilities with more efficient equipment.

French oil company Total SA (NYSE: TOT) owns 60% of SPWR; if the industry begins to consolidate, don't be surprised if TOT splurges for the other 40%.

GT Advanced Technologies (Nasdaq: GTAT): GT provides polysilicon production technology and multicrystalline ingot growth systems, and related photovoltaic manufacturing services for the solar industry worldwide.

It also offers sapphire growth systems and material for the LED and other specialty markets. Between backlighting for small/medium LCDs and applications for large-screen televisions, demand for LED-related lighting is exploding. In fact, researchers expect demand for LED lighting applications to increase more than 25% to 227 billion units.

GTAT is currently trading 65% off its 52-week high of $17.50. The Street's marked it with one-year target price of $12.27, which represents an increase of 100.49% from its current price of $6.12.

GTAT should see success moving forward, thanks in part to the growing LED business. But GT's reputation as a leader in production technology should make it a major part of the solar industry's reinvention.

While the industry is mired in a race to the bottom, with manufacturers trying to improve efficiency and cut costs, GTAT's manufacturing services will be more important than ever.

Trina Solar Ltd. (NYSE: TSL): China's Trina Solar has the cost advantage over most of the industry (possibly excluding First Solar's thin-film panels).

TSL has a projected three-to-five year EPS growth rate of 40%, a five-year sales average growth of 76%, and a long-term debt to equity ratio of only 0.57.

TSL is up over 15% since April 23. Its 52-week high was all the way up to $26.83, but that was a full 12 months ago. Since the beginning of the year, it's peaked at nearly $11, but has mostly traded between $7 and $9. It's one-year target is $8.91.

What's intriguing about TSL is the Chinese government's commitment to ramping up solar installations, and the company's ability to undercut almost all other panel manufacturers on price.

Even in the U.S., where Trina was singled out by the Commerce Department for the highest anti-subsidy punitive tariffs (4.73%), Trina expects good growth. Chairman and CEO Gao Jifan said he expects sales of solar equipment to the Americas this year to reach 20% of Trina's sales.

Yingli Green Energy Holding Co. Ltd. (NYSE: YGE): Yingli is another Chinese solar company eyeing growth outside China's borders.

Earlier this month, Japan shut down its last active nuclear reactor in the wake of the March 2011 earthquake, tsunami, and nuclear disasters. This year, YGE set up offices in Japan to take advantage of the gaping hole in Japan's energy infrastructure.

Additionally, YGE has had some success selling wholesale to companies like SolarCity.

And like TSL, it's targeting growth in South America; YGE just signed an agreement to install 1500 of its 245 series modules on Brazil's highest-profile football stadium, Estadio do Maracana, the site of the 2014 World Cup.

So don't expect solar power stock to be on the mat forever.

New technology and improved efficiency will soon allow solar panel manufacturers to produce essential components at a price that the market will pay.

And as oil and natural gas prices head higher over time, solar will once again be framed as the affordable alternative energy source.

When that happens the outlook for solar power stocks will be considerably brighter.

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