After several difficult years for solar stocks, the group rose 9.9% in January as the Dow hit its highest point in 14 years.
Germany is proposing another mid-year subsidy cut of 3-15%, which would likely lead to a strong first quarter as projects get implemented ahead of the cut. Even with cuts, project returns should remain in the mid-single digits, maintaining healthy investor interest.
Another factor aiding solar stocks is the rise in price for crude oil, now in the $90-$100 a barrel range.
First Solar (FSLR) rose 18.8% on a flurry of positive announcements, including the final environmental permits for its 230 MW Solar Ranch One project and progress on Phase I of its multi-GW project in Inner Mongolia, China.
Yingli Green Energy (YGE) rose 17.2% and Trina Solar (TSL) rose 11.3% because of near-term bullish developments in the German market.
MEMC (WFR) dropped 1.5% because of an oversupply of polysilicon.
Solar demand is expected to remain strong in Italy and the US in the first quarter.
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