Renewable energy investing was the hot stock market sector from about 2005 until early 2008. The crash in fossil fuel energy prices coupled with the 2008 to 2009 bear market wiped out a lot of stock market value in the clean and solar energy sectors. Solar energy stocks in 2013 can be purchased at historically low values from the strongest companies that have survived industry troubles.
Solar Energy Business
The companies in the solar energy sector are primarily involved in the manufacturing, marketing or installation of photovoltaic, or PV, modules, power cells and panels. Some companies specialize in one part of the solar power chain and others cover the full spectrum of energy from the sun. PV cells directly convert sunlight into electricity. Another type of solar energy -- concentrated solar thermal power -- uses mirrors to focus sunlight to generate heat or steam that is used to power more conventional electricity generators.
Solar Power ETFs
One way to invest in the solar power industry is through the purchase of solar energy exchange-trade fund shares. As of early 2013, two ETFs focused on solar energy: the Guggenheim Solar ETF and the Market Vectors Solar Energy ETF. Both funds hold the same two dozen solar energy stocks. One-third of the companies in the funds are U.S. based and two-thirds are foreign companies. Using an ETF lets you invest in the whole solar energy sector with a single investment choice.
Individual Solar Company Stocks
The top 10 stock holdings of the solar energy ETFs are a good place to start your research if you want to own individual solar stocks. Of the dozen stocks in the two top 10 lists, nine trade on the U.S. exchanges. Most of the larger foreign solar energy companies list shares as American Depository Receipts -- ADRs -- in the U.S. With a short list of solar stocks in hand, you can do your own research into each company and pick those you like as investments.
Public Utility Stocks
To get investment exposure to the concentrated solar thermal power side of solar energy, you can invest in the public utilities that have contracted for or built these types of solar power plants. For example, California has mandated that the state's utilities get 33 percent of their electric power from renewable resources by 2020. Some of the world's largest thermal solar power plants are being built in the deserts of the U.S. Southwest. Solar power will be just a portion of a utility company's energy portfolio, but these tend to be more stable stock investments compared to the volatile PV solar energy companies.
- ETF Database: TAN -- Solar ETF Holdings
- ETF Database: KWT -- Market Vectors Solar Energy ETF Holdings
- Solar Plaza: Top 10 Listed Solar Energy Companies
- CA.gov: How Solar Works
- Solar Reserve: Solar Reserve Project Receives Unanimous Approval From California Public Utilities
- Washington Times: California Sets Highest Renewable Energy Mandate
- YCharts. "YCharts." Accessed Sept. 11, 2020.
- TradingView. "GCL-POLY ENERGY HOLDINGS LIMITED." Accessed Sept. 14, 2020.
- TradingView. "SMA SOLAR TECHNOL.AG." Accessed Sept. 14, 2020.
- TradingView. "XINYI SOLAR." Accessed Sept. 14, 2020.
- TradingView. "YINGLI GREEN ENERGY HOLDING COMPANY LIMITED." Accessed Sept. 14, 2020.
- Invest in these names for the long run and understand that they will be very volatile.
- Renewable energy stocks are the future and now could be the time to get in.
- Solar energy investment is increasing year over year.
- Solar energy stocks are not for those who cannot tolerate risk. These are risky stocks.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.