Spring brings sunnier view for solar stocks

By Nichola Groom - Analysis

LOS ANGELES (Reuters) - After a long dark winter, spring has brought a sunnier outlook for solar stocks.

Shares of solar power companies are on the rise again after a sharp sell-off this year, and many on Wall Street said the worst is over for the beaten down sector -- for now.

Volatile oil prices and concerns about a slowing U.S. economy dampened U.S. investor enthusiasm for solar stocks earlier this year following a booming year for the sector in 2007. In recent weeks, however, oil prices have soared to over $100 a barrel and several solar companies have posted robust sales and earnings, bolstering the case for investing in solar power.

"It certainly looks like we've seen the bottom in most solar stocks," Raymond James analyst Pavel Molchanov said in an interview. "Now that the overall market has stabilized and there is more investor optimism in general, we are seeing money flow back into the solar space, with good reason."

Shares of companies like cell and panel maker SunPower Corp (SPWR.O: Quote, Profile, Research), Chinese solar cell maker JA Solar Holdings Co Ltd (JASO.O: Quote, Profile, Research) and Suntech Power Holdings Co Ltd (STP.N: Quote, Profile, Research) have been pummeled this year due to a weakening U.S. economy, uncertainty regarding government subsidies for alternative energy projects in the United States and Spain, and fears of an impending oversupply of solar cells and panels.

JITTERS

SunPower's stock has shed about 45 percent this year after soaring 250 percent in 2007, and Suntech shares are down 55 percent following last year's 142 percent gain.

In recent weeks, however, soaring crude oil prices and rosy earnings reports from companies including JA Solar and Canadian Solar Inc (CSIQ.O: Quote, Profile, Research) have helped assuage investor jitters.