Sector Watch: Solar energy stocks

As oil prices rise, alternative energy sources such as wind and solar power are becoming increasingly affordable, which spells potential success for Canadian Solar Inc. (Nasdaq: CSIQ) and EMCORE Corporation (Nasdaq: EMKR), two small caps rooted in the solar energy sector.

Canadian Solar, together with its subsidiaries, designs, develops, manufactures and markets solar modules for converting sunlight into electricity. It produces standard solar modules for residential, commercial and industrial solar power generation applications, as well as customized products incorporated into customer designs such as solar-powered bus stop lighting and solar-powered car battery chargers. In addition, the company works with government agencies to implement solar power development projects and is already providing solar-powered electricity to rural areas of China.

Canadian Solar markets its standard solar modules through distributors and system integrators worldwide. Specialty products are sold directly to manufacturers. The company is headquartered in Canada and manufactures its solar modules in China.

In mid-November, Canadian Solar announced a major new contract in Spain to deliver solar panels representing 60 megawatts of annual generating capacity. Deliveries have already commenced and the company expects to complete the installation this summer. In addition, Canadian Solar recently delivered 11.7 megawatts of solar module generating capacity to Germany for three large solar power projects. Spain and Germany are emerging as important solar markets because of new government incentives driving demand.

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