NEW YORK (TheStreet) -- I was talking today to Joe Deaux about two solar stocks headed in opposite directions: First Solar (FSLR) and SolarCity (SCTY). Of the two, I happen to prefer the one that has recently been headed downwards, SolarCity.
First Solar has continued to ride a wave of success in large-scale utility installations of solar power, up 58% in 2013. This has been historically where First Solar has made the lion's share of its revenue. Recently, it has guided very well for 2014 and 2015 and was upgraded by two analysts, causing the rocket move on Tuesday.
However, as utilities are meeting their mandated renewable percentage goals, the growth of large-scale solar production will necessarily slow. While some opportunities for new large projects are on the horizon in the UK and in Australia, the drying up of subsidies in the rest of Europe also bodes poorly for continued parabolic revenue growth.
First Solar has made a goal of diversifying its production towards industrial rooftop installations, but that refocusing will not make up for the loss of big projects that are the core of First Solar's business model.
Not so for SolarCity, which has been riding the wave of increased domestic installation of solar panels, at least until all the momentum stocks took a major hit in the last two weeks of trading. But the trend in solar is clearly defined by the move away from large-scale projects and towards the individual homeowner's rooftop. In this trend, SolarCity has by far the smartest and most painless initiation to increasing home sales.