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What Are the Different Types of Solar Stocks?

Dana DeCecco
Dana DeCecco

The different types of solar stocks available to the investor are basically various technology stocks. Solar stocks can also be classified as renewable energy stocks, alternative energy stocks and green stocks. These stocks are traded internationally, and solar companies are active in many different countries. Solar companies produce the equipment and are also involved in project development, construction, operation and maintenance services.

There are three main categories of solar power equipment. Photovoltaics (PV) is the dominant technology in the field of converting sunlight into energy. PV modules are produced and configured in many different ways. Solar thermal systems capture heat created by sunlight. Concentrated solar power (CSP) makes use of reflectors concentrating the suns energy on a single collector. The companies competing in these categories comprise the investment field of solar stocks.

Solar power is one area of alternative energy investment.
Solar power is one area of alternative energy investment.

The investor interested in solar stocks can purchase the stock of any publicly traded solar company. Companies involved in the production of photovoltaic cells are heavily traded in all stock exchanges. These companies are highly competitive, and care should be taken in the selection of individual solar stocks. Solar stock prices range from very expensive to very inexpensive.

Another way to invest in the solar industry is through exchange-traded funds (ETFs). Some broad ETF products that are geared toward alternative energy and clean energy are heavily weighted in solar stocks. Energy ETFs are all weighted differently. The investor should analyze the performance of ETFs before investing. Some ETFs are thinly traded and therefore not a liquid investment.

Global exposure to the solar power industry is available through index ETFs that track the global solar energy market. This type of broad-based investment might provide a risk-controlled investment in comparison to trading individual solar stocks. The investor should examine the weighting systems of these indexes. Many large conglomerate corporations are involved in the solar energy field, but solar power is not their main source of revenue.

A very large portion of solar cells are produced using silicon as the base semiconductor. An investment in silicon production might be an alternative way of investing in solar power. Silicon is basically sand, which is quite abundant. Refined silicon is a commodity with a limited supply. All kinds of semiconductors are made with refined silicon, including photovoltaic cells.

There are a few arguments against investing in solar stocks. The intense competition might drive prices and profits lower. The field might become diluted with competitors. Even though solar power can be a thriving industry, the incentive to lower the cost of solar power might be accompanied by a reduction in corporate profits.

Renewable energy sources might experience increased demand in the future. Government subsidies promote the use of alternative energy sources in an effort to reduce the use of fossil fuels. Solar energy produces a limited amount of electrical power, but increased technological development of this resource might prove to be a good investment.

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    • Solar power is one area of alternative energy investment.
      By: Pinosub
      Solar power is one area of alternative energy investment.