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Photograph by Andreas Gücklhorn
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After a difficult 2018 year, solar installations seem to be booming in the world and several actions should benefit, writes Brian Lee, an analyst at Goldman Sachs.
The story back. The growth of solar energy has been a hindrance in 2018, as global demand dropped for the first time. The tariffs imposed by President Donald Trump and changes in solar support in China have blocked companies in the sector.
The Solar Energy Industries Association released its market report for 2018 on Wednesday and concluded that the total number of installations in the United States decreased by 2% from 2017.
What's up. This year's announcement is much more promising, and the momentum could last long enough, Lee writes. Solar stocks have already outperformed the market this year and Lee is expecting further gains.
Demand for solar energy could grow double digits in 2019 and 2020, thanks to supportive policies in Europe, the United States and Asian countries, helping boost growth, Lee said. In Europe, increased government support could lead to a 30% increase in the number of facilities, he warns.
Even the Middle East is experiencing a solar boom, with Lee expecting the region to add seven gigawatts of solar power in 2019, an increase of 157% over 2018.
Look forward. Investing in solar cell manufacturers has been a risky proposition in the past. Competition is fierce and prices have fallen precipitously for years. Companies are often in debt and unprofitable. But Lee thinks prices have stabilized, given the strong demand for solar products, and recommends five stocks to follow the trend.
First solar
(symbol: FSLR), a US solar power utility that sells to utility companies, could rise 19% to $ 64, while large-scale solar energy is growing at a compound annual growth rate of 40% until 2020, writes Lee. First Solar sold 0.5% Thursday at $ 54.46.
Canadian solar
(CSIQ) carries out about a quarter of its operations in China and is exposed to US projects that, according to Lee, could allow the title to be raised to $ 26. Canadian Solar was almost flat Thursday at $ 23.23.
Vivint Solar
(VSLR), a Utah company that sells in the residential market, could reach $ 6.50, according to Lee's plans. Vivint was trading down 0.6% Thursday at $ 4.98.
Negotiated in China
Longi
(601012.China) and
Tongwei
(600438.China), could increase by 8% and 10%, respectively, because of rising revenues of their businesses, said Lee.
Write to Avi Salzman at [email protected]
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