Bright Outlook for US Solar Stocks

08/20/2015 9:00 am EST


Say what you want about China, but when the Middle Kingdom goes big, it goes really big, asserts Jeff Seigel, editor of Energy & Capital, in a review of the solar power industry in China.

A solar power station in the Gobi Desert is still in production, but when completed, it will measure ten square miles and produce enough electricity to power around one million homes.

Of course, it’s no secret that China is in a mad dash to integrate a massive amount of renewable energy.

Last year, Chinese officials announced a mandate to triple installed solar capacity to 70 gigawatts by 2017. Wind power capacity is also required to grow to 150 gigawatts.

Why? First, China is choking on its own progress. Building an industrial powerhouse doesn’t come without side effects.

In China, the air pollution is so bad that scientists say it resembles a nuclear winter. Photosynthesis in plants has actually slowed.

Another reason China has been so aggressive on the solar front is because the government has shouldered the country’s entire solar industry.

Without significant state support—in the forms of mandates and massive cash infusions—it’s likely that nearly every solar company in China today would be floating downstream in the industrial waste- and sewage-filled waters of the Yellow River.

Earlier this year, as we began to see the cracks form in China’s stock market, I suggested it was time to dump China solar stocks.

China is an extremely risky bet right now; as such, it makes no sense to hitch our wagon to China solar stocks when there are plenty of US solar stocks that are much more valuable.

Right now, there are four US solar stocks that are primed for massive growth and all of them have been able to compete successfully against a heavily subsidized Chinese solar market.

SunPower (SPWR)
First Solar (FSLR)
SolarCity (SCTY)
SunEdison (SUNE)

As a side note about SunEdison, the company recently announced a wider-than-expected loss. The stock fell sharply as investors jumped ship.

But they’ll soon be swimming in an ocean of regret. While some were scared off by the loss, others used the dip in share price as a buying opportunity.

The truth is, losses are expected to continue through 2017, but the huge buying spree that the company’s been on lately is setting it up to be the biggest renewable energy player on the planet.

From running wind farm operations in India to consolidating the US installation market, SunEdison is quickly becoming a behemoth. Bottom line: SUNE is a bargain.

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