Solar stocks soar on outlook for U.S. subsidies

LOS ANGELES (Reuters) - Shares of solar power companies soared on Friday on optimism that key tax subsidies for the renewable energy sector could be extended by U.S. lawmakers in the coming weeks.

First Solar Inc's FSLR.O stock climbed more than 12 percent to an all-time high, while shares of JA Solar Holdings Co Ltd JASO.O, LDK Solar Co Ltd LDK.N and SunPower Corp SPWR.O also logged big gains.

Investors in solar power companies have been anxiously awaiting an extension of federal tax credits for alternative energy companies that are set to expire this year.

Those concerns, as well as a slumping U.S. economy, helped send solar stocks into a tailspin earlier this year after most saw meteoric rises in 2007. In recent weeks, solar stocks have rebounded as oil prices climbed over $100-a-barrel and several companies posted robust results.

Investors are also more optimistic about the extension of federal subsidies, analysts said.

A new bipartisan proposal by U.S. Senators Maria Cantwell and John Ensign would extend the tax credits, and Wall Street analysts said the measure has a good chance of passing soon because it is not linked to a tax hike for Big Oil.

“There are more expectations that something is going to get done,” Wedbush Morgan Securities analyst Al Kaschalk said in an interview.

First Solar shares also received a boost from news that the company is in talks with U.S. utilities to build renewable energy projects, analysts said.

“They will probably start erecting projects later this year that look more utility-scale,” Pacific Growth Equities analyst Michael Horwitz said.

On Thursday, First Solar Chief Executive Michael Ahearn told Reuters that the company was “having multiple discussions” with U.S. utilities.

“What we are trying to get to this year is some initial relationships and some pilot projects,” Ahearn added.

Ahearn’s remarks were noted on television Thursday evening by popular stock picker Jim Cramer, whose recommendations can drive a company’s shares sharply higher.

First Solar shares rose $26.40, or 10.5 percent, to close at $278.00 on Nasdaq. The stock hit an all-time high of $283.90 earlier in the session.

First Solar makes thin-film solar panels that cost less to manufacture than traditional, silicon-based panels.

Shares of LDK, which rose $4.78, or 15 percent, to $36.40, were also lifted by an announcement on Friday that the solar wafer maker had secured a new polysilicon supply agreement. Polysilicon is a key raw material for solar companies and has been in short supply.

JA Solar rose $3.28, or 16.7 percent, to close at $22.93, while SunPower’s rose $8.39, or 10.2 percent, to $90.40.

Evergreen Solar ESLR.O shares rose 71 cents, or 7.1 percent, to $10.69, and option volume in the stock was running eight times the normal level, according to Jon Najarian, a founder of Web information site in Chicago.

Additional reporting by Doris Frankel; Editing by Gary Hill