Solar Stocks Jump on Obama Plan, Economy

Shares of solar-energy companies jumped on Chinese subsidies, optimism the Obama administration will succeed in pushing through policies that help the industry and signs the economy may be close to bottoming out.

Suntech Power (STP Quote) increased 38% today, LDK Solar (LDK Quote) rose 29% and Yingli Green Energy (YGE Quote) advanced 22%. Techtronic Industries (TTNDY Quote), SunPower(SPWRA Quote), Energy Conversion Devices (ENER Quote) and GT Solar International (SOLR Quote) also gained at least 10%.

TheStreet.com Ratings' model rates SunPower, Energy Conversion Devices and Suntech Power in the "hold" range, while issuing "sell" grades for LDK Solar and Yingli Green Energy.

China this week began offering subsidies toward the purchase of rooftop solar systems. Back home, $2.6 billion in federal stimulus money has begun flowing through the Energy Efficiency and Conservation Block Grant program of the U.S. Energy Department.

Energy is a major theme in the budget that President Barack Obama submitted to Congress. The sector is more likely to find success once the economy rebounds. Indeed, there have been better-than-expected reports. Durable-goods orders for February rose 3.4% after falling 7.3% in January, confounding economists, who were forecasting a decline. New-home sales also increased in February, by 4.7%.

To place a bet across the board on a turnaround in solar stocks, there's Market Vectors Solar Energy ETF(KWT Quote). It holds all of the companies mentioned above, except Techtronic Industries. Claymore/MAC Global Solar Energy Index ETF(TAN Quote) omits GT Solar. Neither fund, both of which began trading a year ago, have compiled a long enough track record to be rated.

The downside of a potential return to economic growth is the ratcheting up of crude-oil prices. The spot price of West Texas Intermediate Cushing crude opened at $54.29 today, the highest since Nov. 28. High energy prices make solar energy a more viable option.