SunPower Corporation (SPWR), First Solar, Inc. (FSLR): Solar’s Efficiency Improves…Is It Time to Invest?

Yingli’s commercial cells already boast a cell efficiency around 17% and its costs continue to fall. China will import huge amounts of energy in the form of uranium and coal. In the name of energy security, the government is motivated to develop a strong domestic energy sector and this will help support Yingli. The firm’s current gross margin of -1.4% and EBIT margin of -27.5% show that winning the cost war doesn’t always make profits.

Conclusion

The solar industry continues to evolve with more efficient panels. Overall the industry is becoming a net energy producer. In the long run this will help society and investors as it will allow manufactures to produce more with fewer resources.

SunPower Corporation (NASDAQ:SPWR) is one of the best long term investments with highly efficient panels. Regardless, Investors need to watch the firm’s costs. If SunPower is not able to bring costs down, then cheaper producers like Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) will slowly start to take away their business. For the time being Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) is best avoided because of its high debt load and low margins. Until First Solar, Inc. (NASDAQ:FSLR) can bring its costs down and increase its efficiency, it is best looked at from the sidelines.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.