Buy SunPower (SPWR)

01/05/2010 8:30 am EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Demand will pick up—eventually—for solar energy companies as the global economy crawls toward recovery and as countries add more incentives for clean power.

That doesn’t mean that everyone is going to make money, though, since prices are dropping like a stone and many companies, such as Q Cells, are struggling to cut costs faster than prices are falling. SunPower’s (SPWR) way out of that bind is through vertical integration from manufacturing through installation.

The services it provides to solar dealers and installers save dealers and installers significant costs, which lets the company charge slightly higher prices for its solar modules. I don’t think SunPower is ignoring the need to cut manufacturing costs, however. In fact one of the reasons that I like this solar manufacturer is that it’s roots are in the silicon chip industry so it gets the way that higher quality and increased power generation per module can make up for lower labor costs at some competitors.

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