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Solar stocks are shining bright, which ones won't lose their luster?


Shares of First Solar (FSLR) have blasted off in the last three days after the company said its nascent partnership with General Electric (GE) would yield big returns by 2016. Despite the company taking down estimates for the current year, First Solar said it could see revenues of $3.8 to $4.5 billion, slightly ahead of the $4.1 billion average analyst estimate.

That mildly positive outlook took shares more than 25% higher as speculators continue to chase almost anything related to alternative power sources. Suffice it to say that kind of volatility is a sign that animal spirits, rather than careful analysis, are ruling the day.

In the attached clip OptionMONSTER’s Jon Najarian says there are more rational ways to invest in solar for the longterm. Specifically he prefers the wafer companies over the developers of huge solar parks.

At the top of Dr J’s list is Canadian Solar (CSIQ). “They are a wafer play and they scrub old silicon and turn it into something reusable. That’s always one that I look for on the dips.”

SunEdison (SUNE) is another wafer play Najarian thinks has great longterm prospects.

As for the company that got the solar party started, Najarian understates that First Solar shares may have gotten ahead of themselves. “They had an analyst day and a lot of shorts,” he says. That’s a lethal combination for bears, but chasing momentum can be equally cruel to investment newbies. It’s worth noting that FSLR peaked out over $300 a share back in 2008.

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