Chris Lau, Kapitall: Some solar stocks are seeing the light after dark times. Is it time to consider these companies for your portfolio? Solar energy stocks are at bouncing sharply higher yet again. After spending much of 2012 in the doldrums following their valuation collapse in 2011, some investors are betting the sector is healthy again. Should this rally be trusted, or could it lead again to investor heartbreak? Market caps rise The market value of a number of solar power companies rose sharply this year: Click on the interactive charts below to see data over time. Sourced from Zacks Investment Research. First Solar (FSLR) and Trina (TSL) are notable – both are more actively traded and are each worth more than $1 billion. At a macro level, many of the headwinds in solar are dissipating. The Indian government set a domestic capacity target of 10 gigawatts for 2017. And China set a 35 gigawatt utilization target. This provides at least some floor for solar demand. Tariff war lightened In the US, the solar trade group issued a proposal that intended to get rid of the tariffs set against solar companies in China. In August, a minimum price was set for solar modules between the European Union and China. That month, a minimum price of EUR 0.56 per watt was set for as much as 7 gigawatts of imports. Stocks respond Trina Solar is most notable for rallying around 26% in the last month: In the last year, there has also been a jump between around 83% for First Solar and 552% for Daqo New Energy (DQ). The bulk of returns occurred in the past few days for Daqo: Bottom line Fundamentals improved substantially over the last few months. Demand stands to improve, and the supply glut may moderate as more weak firms close. These changes take time, and as usual, solar energy stocks are rallying in advance of the anticipated improving circumstances. Markets may not have priced in downside, and many investors did not take profits on the recent rally. If there is a pull-back in shares soon, investors may shine a light on better prices.