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The Reasons Behind the Recent Solar Stock Flare-up

Solar Stock Flare-upIt all started on the 20th of May when a number of solar stocks saw an unusual rise. Jinko Solar and Trina Solar on NYSE and Canadian Solar on NASDAQ went up by an average of 15 percent. Hanwha Solar, also on NASDAQ, went up around 30 percent. The big winner was Real Goods Solar on NASDAQ which went up by a huge 250 percent in just 2 days.

From an analytical perspective, there were a number of reasons that led to the increase. For instance, Solar City on NASDAQ received financing of $500 million from Goldman Sachs. This financing means that Solar City can generate about 110 Megawatts from its new projects. Therefore, a large number of solar panels will be required for the purpose.

Chinese solar manufacturers stocks went up due to the rumor that there would be a negotiated settlement between EU, China and U.S on the duty of solar panels.

The impetus was also provided from a Chinese solar panel manufacturer, JA Solar holdings, which showed improvement in their first quarter earnings.

The behavior of energy providers is also relevant in this case with some providers from Canada/US purchasing solar panels. This combined with the cheaper rates on utilities from www.albertaenergyproviders.com hinted that the solar business is doing fine. Energy suppliers across the nation are now being rewarded by the market for their focus on renewable energy.

In order to analyze the solar stock flare up, the example of Real Goods Solar can also be taken into consideration. Back in December 2011, the stock price was at $1.37. After more than a year, they were around $2 on May 17th. Now within a less than a month, they’re trading at $4 to $5. The float value of the shares is around 8.4 million. Just last month, the company traded 32 million shares which is more than its outstanding share figure of 26.7 million.


Real Goods Solar, Inc. (RSOL) – click for full chart.

This frenzy was partly initiated by the fact that the company had managed to increase its solar panel installation number by 23 percent. The news that the coming quarter would be of high profit for the company also made an impact.

The real boost came when the company signed a deal with a major home builder. As per the deal, solar panels from Real Goods Solar were going to be a standard feature of all homes. The homes are expected to be built in California, which is considered a solar friendly state.

Real Goods Solar also signed a deal with the Unified School District of Stockton California that the company would install solar panels, and this added the cherry on top of the cake. The expected value of solar panels is around $20 million being financed by the Smart Energy Capital initiative. These factors led to the mammoth rise in stocks for the company.

In a similar vein, there’s the example of Canadian Solar Inc. which has been making steady progress. The possible reason for their stocks faring well is that they recently launched a Residential AC panel. The innovative value of the product is quite high, which is creating market interest.

If a zoom back analysis is made for the last 5 years, this sudden rise can be treated as a minor blip rather than a newly emerging trend in the market. All the statistics indicate investing in solar energy looks promising.


Canadian Solar Inc. (CSIQ) – click for full chart.

Disclosure: Contributing article written by Becky Wilcox and does not represent opinions of StockRants.com.

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About Becky Wilcox

Becky Wilcox is a freelance writer who has an ear for personal finance, debt, and equities. In her spare time she loves to pursue a healthy lifestyle along with trying new dishes in the kitchen.

  • Judeth

    Let us whether this becomes a permanent trend. What are your opinions?