Warm Up to Solar Energy?

It’s easy to see that solar power has a bright future. Whether the stocks are attractive, however, is a bit cloudy.

Solar energy, on the far-out fringes of the power grid for eons, is about to come into its own. Solar as a subject for the 2008 political debate is a no-brainer, as the drive to decrease dependence on foreign energy sources looms large as an issue. Even as government incentives here and abroad plump up demand, production costs are falling, and the solar industry is figuring out pricing options that will finally bring the photovoltaic phenomenon mainstream. Rising fossil fuel prices boost solar's appeal daily. Bank of America, for one, expects solar energy production to increase at a compound annual growth rate of 35% through 2010.

So as an investment theme, solar energy stocks are no-brainers, too, right? Well, hardly. Even the experts who analyze these companies for a living can't agree on which ones to buy. Consider the crossed swords in recent days: On March 26, Bank of America Securities initiated coverage of Evergreen Solar with a sell recommendation, while on the same day Zacks Equity Research rated the stock a buy. On the same day, BofA rated First Solar a buy, but on March 27 American Technology Research called it a sell. American Technology meanwhile gave Suntech Power a buy rating, while BofA mustered only a neutral call.

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Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.