BOSTON (TheStreet) -- Solar energy stocks, stuck in the doldrums last year, are leading all other industries so far in 2011, helped by skyrocketing oil prices and supply constraints.

Solar stocks have rallied 37% since the start of January, the best of 145 industries tracked by research firm Morningstar. The No. 2 industry return is far behind, at 22%. The

S&P 500 Index

is up 5.9%.

That performance means there has been an about-face in investor interest in the past quarter as the industry was one of the worst-performing sectors on that list through the end of November.

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Morningstar tracks the returns of almost 50 solar company stocks, and many are micro-caps and small-caps. There are only seven solar energy companies with market values over $1 billion.

Nevertheless, there is tremendous analyst interest in the sector, as some companies, with market values of barely $2 billion, are garnering as many as 30 Wall Street firms' ratings.

Regarding returns, it's not just traditional fuel prices driving the rise. A Morningstar analyst says "the growing global political support for alternative energy will make solar a high-growth industry this decade, due wholly because of subsidies and government incentives. Any major pullback in public support would be financially devastating." Germany and Scandinavia have laid the template for other countries to follow.

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The most important trend in the business is that the solar power industry has become commoditized because the primary consideration of end-customers is to install systems at the lowest cost.

As a result, low-cost manufacturers are leading the industry, in terms of earnings and share price returns. And, increasingly, companies seeking low-cost labor and production facilities are moving operations to China.

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Solar energy is a highly competitive and evolving industry and technology, which means stock price volatility will likely continue. Investing in the sector is not for the faint of heart.

Here, then, are

five of the current industry leaders

:

The largest solar firm and industry bellwether -- it has a market value of $13 billion -- is

First Solar

(FSLR) - Get Report

, a Tempe, Ariz.-based maker of solar panels and turnkey solar systems.

Last month, it reported fourth-quarter net income rose 3.7% to $155.9 million, or $1.80 a share, from $150.3 million, or $1.65, a year earlier. Still, revenue fell 4.8% to $609.8 million.

For 2011, the company said it now sees sales totaling $3.7 billion to $3.8 billion, and earnings per share of $9.25 to $9.75.

First Solar gets an amazing amount of analyst coverage. Standard & Poor's found 47 analysts giving ratings on the stock, including 11 "buys," 14 "buy/holds," 16 "holds," four "weak holds" and two "sells."

Standard & Poor's, which has a "hold" recommendation and gives First Solar three out of five stars, expects sales to increase 48% in 2011 and 13% in 2012. "We anticipate significantly higher volume going forward, driven by its aggressive capacity expansion plans," S&P says.

Institutional investors hold about 40% of the company's shares, led by Capital World Investors, at 12%.

First Solar's shares are up 13% this year and 40% over the past 12 months.

The

Fidelity Select Environment and Alternative Energy Fund

(FSLEX) - Get Report

added

Trina Solar

(TSL)

to its portfolio in the fourth quarter. Trina, of China, is a leader in low-cost silicon technology.

Morningstar analyst Stephen Simko writes in a research note that "Trina has emerged as one of solar's cost leaders and is well-positioned to continue outgrowing the industry as it steals share from less-efficient competitors."

He adds that "a major factor in Trina's future will be the development of the Chinese solar market. Currently, solar installations in China are insignificant. However, as the growth of the Chinese wind market illustrates, the country has enormous potential and markets can develop very rapidly."

"Trina's emergence as a low-cost leader positions it well to be an industry leader in the near term. We forecast sales to grow at an average rate of 30% during the next few years," he said.

Trina's shares have been on a rollercoaster ride. After gaining 481% in 2009, they slipped 13% in 2010 and are up 18% this year. The company has a $2 billion market value.

For fiscal 2010, analysts estimate Trina will earn $3.50. For fiscal 2011, they estimate earnings per share will grow by 22% to $4.27.

Standard & Poor's reports 14 "buy" ratings, 11 "buy/holds," four "holds" and two "weak/hold" ratings from analysts following the company.

The top pick of the

Guinness Atkinson Alternative Energy Fund

(GAAEX) - Get Report

, with a 44% allocation to solar stocks, is

ReneSola

(SOL) - Get Report

.

ReneSola is a Chinese maker of crystalline silicon raw material and solar wafers. Solar wafers are used by manufacturers of photovoltaic solar cells, which make up solar panels.

Zack's Investment Research says "the company's fortunes look good due to its geographically diversified customer base, ongoing expansion programs, a subsidy program in China, improving operating efficiencies, rising margins and material cost savings."

Institutional investors own about 13% of its shares, led by Luminus Management, at 2.2%.

ReneSola, with an $824 million market value, has seen its share returns relatively stable compared to its peers, with a gain of 8% in 2009, 84% in 2010 and 26% this year.

Zack's rates its shares "outperform," with a price target of $12. It's currently at about $9.57.

Morningstar analyst John Ayling writes in a Feb. 7 research note that ReneSola, "by expanding operations both upstream and downstream in the solar supply chain, is pursuing a vertical integration strategy that could help it improve its cost structure in the long run."

But he added that it has a concentrated customer base and faces tough competition from its peers.

Of the nine analysts who follow the company, there are seven "buy" ratings and two "holds."

One of the top picks of the

Calvert Global Alternative Energy Fund

(CGAEX) - Get Report

is

SunPower

( SPWRA), the second-largest U.S. solar company.

The company's solar panels are of traditional silicon technology, but are among the most technologically advanced panels being produced commercially.

On Feb. 24, the company received county approval in San Luis Obispo, Calif., to build what could one day be one of the world's largest solar power plants. When built, SunPower's photovoltaic California Valley Solar Ranch is expected to generate enough electricity to power about 100,000 homes. Its construction is still a long way off, but it's in the process of arranging financing.

Morningstar analyst Stephen Simko wrote on Feb. 28 in a research note that "SunPower's industry-leading technology generates the most electricity per panel of any solar company and is naturally advantaged with respect to space-constrained installations."

SunPower gets plenty of attention from analysts, garnering 11 "buy" ratings, three "outperforms," 17 "holds," two "underperforms" and three "sells."

Shares are up 34% this year, but over the past year, they're down 10%. The company has a $1.7 billion market value.

Yingli Green Energy

(YGE)

, one of the world's largest solar panel manufacturers, is a big position in the

Guggenheim Solar Exchange Traded Fund

(TAN) - Get Report

. The company's primary market is in Europe, but it's expanding in its home base in China and aiming to launch business in the U.S.

Morningstar analyst Stephen Simko writes in a Feb. 24 research note that Yingli's "low cell and module costs provide it with a cost structure superior to the vast majority of its solar panel competitors, and that will allow the company to achieve near-term growth above the industry average."

He adds that a major factor in Yingli's future will be the development of the Chinese solar market.

The company earned 92 cents per share in 2010. Analysts see that rising to $1.61 per share in 2011, but remaining flat in 2012.

Yingli has seen its shares rise 17% this year after losing 38% in 2010. The company has a market value of $1.7 billion.

Thomson Reuters reports that Yingli's shares get seven "strong buy" ratings, seven "buys," 12 "holds," two "reduces" and one "sell."

Analysts' mean 12-month price target is $14.80. It currently is trading around $11.54.

>To see these stocks in action, visit the

5 Solar Stocks

portfolio on Stockpickr.

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