Why Solar Penny Stocks Could Generate Big Gains in 2011

In the last several years, increased popularity in technology that protects the environment and weans American consumers off of fossil fuels — so-called “green tech” — has become an easy-to-identify trend. Before the recession reared its ugly head, green tech IPOs were all the rage, helping these firms to raise billions of dollars in funding and giving early-stage investors substantial returns as new buyers bid up shares of the big names.

Ultimately, the argument for green tech (particularly energy green tech) is an easy one to understand.

As prices rise for finite resources like oil and environmental concerns mount, there’s increased incentive to look elsewhere for fuels to power our 21st-century lifestyles. Likewise, as the cost per watt drops on a slew of renewable energy sources, the commercial viability of technology like solar and wind power suddenly becomes a reality.

As a penny stock investor, the most promising of the green tech options is solar. That’s thanks in large part to its relatability — everyone’s seen the sun. At the same time, solar panels are becoming increasingly common, popping up everyplace from city skylines to production car rooftops.

Solar trends look only to increase in the next few years. Although solar cells generate only around 8% of U.S. electricity right now, that number is expected to increase to a much more material 13% by 2035. And jobs are expanding to ramp up for the expected sales hike; amid caustic jobs numbers, it’s estimated that the solar industry added 17,000 jobs to the economy in 2009, and 26% growth is expected this year. That’d bring 2011’s solar job total to 24,000 new jobs.

It doesn’t hurt that solar is also an incredibly investable trend. Today, with approximately 39 solar firms trading on major exchanges worldwide, the industry offers far more choices to investors than any other renewable energy option.

That’s not to say that solar stocks haven’t had rough roads in the past. While green tech was hot in the years leading up to 2008, the recession (and the systemic drop in demand that accompanied it) shifted priorities away from renewable energy into survival mode. Even so, the traditional Wall Street media are quick to forget that some firms managed to thrive in spite of economic head winds.

The Best Small-Cap Solar Stock

Indeed, we’re not here to recommend that you buy some average company in a hot sector today. Instead, it’s crucial to do the research, and look for a small-cap industry leaders that are still managing to fly under the radar. Of course, we have our own favorite solar plays – earlier this month, Greg Guenthner and I recommended that our Penny Stock Fortunes readers buy shares of a small solar company that’s making big waves (if you’re a PSF subscriber, click here to get our full analysis).

If you do decide to invest in a small-cap solar play, finding a stock with a low cost structure and a solid balance sheet are going to be two of the most crucial elements.

Sincerely,
Jonas Elmerraji
Penny Sleuth

January 27, 2011

Why Solar Penny Stocks Could Generate Big Gains in 2011 was originally featured in the Penny Sleuth. Check out Wall Street’s 5 Most Profitable Penny Stock Patterns Report.

This story was originally featured on Penny Sleuth.

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