NEW YORK ( TheStreet) -- Solar stocks, weighed by plunging crude oil futures, have taken a beating along with the broader energy sector lately, especially this week. But the sharp selloffs make the strongest solar stocks even better buys in the fast-growing industry.
Stocks in the solar-energy industry, while volatile, should be stable long-term investments as recent data show that demand for solar power is strengthening at a rapid clip.
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While many stocks are affected by low energy prices -- for instance, airline stocks benefit from lower fuel prices -- solar stocks trade more in immediate tandem with the energy sector as investors consider the overall cost of energy. So, if crude oil prices are getting close to their nadir, the bottom of the solar stocks' slide will likely come sooner than later.
On Thursday, First Solar's shares closed at $43.04, which was close to the bottom of their 52-week range of $42.68 to $74.84, while SunPower's stock closed down 1.3% at $23.47, also close to the bottom of its 52-week range of $23.19 to $42.07. On Friday, First Solar was off 26 cents to $42.72, and SunPower was up 7 cents to $23.54.
Shares of First Solar were dented last month after the company reported disappointing third-quarter results. The company, which primarily caters to utilities, is stepping into the residential market with a newly announced partnership with Clean Energy Collective. First Solar bought an equity stake in the firm.
SunPower, which also mainly develops utility-scale installations, cut its fiscal 2015 outlook to below the analysts' estimates last month. But speaking to its long-term potential, it plans to triple capacity to 3,900 megawatts by 2019 with at least three projects.
Photo-voltaic installations in the U.S. rose 41% in the third quarter from a year earlier, making it the second-largest quarter ever for solar growth, according to Solar Energy Industries Association's U.S. Solar Industry report released on Tuesday. In the first three quarters of 2014, solar power comprised about 36% of new power that came online, up from 29% in the same period in 2013.
SolarCity (SCTY) , which is more focused on residential solar power, managed to counter sector losses Thursday, closing up 1.2% on both a bullish analyst report from Raymond James and a newly announced $400 million financing deal from Bank of America for solar projects into 2015. But even SolarCity's stock has dipped into more buyable territory as of late. Shares of the company, which holds about 36% of the residential solar market, are trading down about 10% year-to-date. close to the bottom of their 52-week range of $45.79 to $88.35 as the company continues to invest aggressively. On Friday, the stock traded at $50.02, down 1.8%.
In a broader sector gauge, the Guggenheim Solar ETF (TAN) , which includes First Solar, SunPower and SolarCity among its 25 solar holdings, closed up 0.6% Thursday at $34.29, near the low of its 52-week range of $32.23 to $51.07.
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The Street rates First Solar and SunPower as holds, and SunPower as a sell.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates FIRST SOLAR INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FIRST SOLAR INC (FSLR) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
You can view the full analysis from the report here: FSLR Ratings Report