SolarCity Corp (SCTY), First Solar, Inc. (FSLR): The Upcoming Challenges to the Solar Industry

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Aside from First Solar, which trades at book value and at a P/E of only 9 times earnings, other rivals are pretty expensive. Investors are willing to pay almost three times book value for SunPower Corporation (NASDAQ:SPWR), and more than 15 times (!) book value for SolarCity Corp (NASDAQ:SCTY). It seems that all the sunny future has already been priced in.

Looking forward

The industry, as a whole, is over-dependent on government legislation and subsidies. Once NG becomes a viable substitute, the price of solar panels drop, and legislation becomes less favorable, solar companies will be closing shop. And with sky high valuations for their shares, it’s going to be the investors who will be forced to run for shelter.

Shmulik Karpf has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article The Upcoming Challenges to the Solar Industry originally appeared on Fool.com.

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