Pandora, SunPower: How to Play Specialized Technology

Sun shines, but how long?

Quite opposite to Pandora and Yelp Inc (NYSE:YELP), SunPower Corporation (NASDAQ:SPWR) makes physical products and presents a business model that appeals to a wider array of investors. In the most recent quarter, its revenues jumped to $635 million from $494 million in the same period last year while losses also reduced to $54.7 million from $74.5 million. While its forward earnings ratio of 23.4 is on the higher side, it is better than the three digit values for many other similar companies.

The only glitch with this solar electric system manufacturer is over-reliance on government for subsidies. In absence of government incentives, growth in the solar energy market remains doubtful. As governments remain under pressure globally to cut on expenses, it is possible to see the axe falling on subsidies. The stock has tripled in the last year which is great but this movement opens further downside in the event of a correction.

Foolish bottom line

Overall, these plays may be everyone’s cup of tea. However, for those interested in taking a long call on future earnings, Pandora Media Inc (NYSE:P) and Yelp Inc (NYSE:YELP) offer great potential. SunPower Corporation (NASDAQ:SPWR) may still outpace these stocks but prudence suggests investors should look into the models which are self sustainable.

Jacob Wolinsky has no position in any stocks mentioned. The Motley Fool recommends Pandora Media Inc (NYSE:P).

Jacob is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article How to Play Specialized Technology originally appeared on Fool.com.

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