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3 Top Solar Stocks to Buy Now

FSLR Cash and Equivalents (Quarterly) Chart

The solar industry has been crushed the last twelve months, but in many ways it's in a better position than ever. The cost to build solar plants is falling and is now competitive with fossil fuels, countries from the UAE to Argentina are building plans to expand in solar, and industry consolidation has left fewer major competitors.

Despite the potential, there's still a lot of risk ahead. 8point3 Energy Partners LP (NASDAQ: CAFD) , First Solar, Inc. (NASDAQ: FSLR) , and SunPower Corporation (NASDAQ: SPWR) are three solar stocks with a lot of potential for investors, but some protection from risk as well.

FSLR Cash and Equivalents (Quarterly) Chart

FSLR Cash and Equivalents (Quarterly) data by YCharts .

Despite the upgrades, First Solar plans to be at breakeven to a profit of $0.50 per share next year and end the year with a net cash balance of between $1.4 billion and $1.6 billion. That's a strong position to fall back on even if the solar industry remains as competitive as it is today. First Solar is worth betting on for the balance sheet alone and if Series 6 brings higher margins and bigger profits as expected that would be icing on the cake.

Image source: SunPower.

The solar efficiency leader

One of the hardest hit solar companies of the past year has been SunPower. The company's high efficiency panels were hurt by falling panel costs and management didn't execute on project signings and sales as expected, something competitors dealt with as well. But SunPower continues to have the highest efficiency panels on the market and it's taking lumps in 2017 in an effort to be more competitive in following years.

High efficiency should lead to strong results for SunPower's residential and commercial businesses, regardless of what utility demand looks like. But the company's transition to a new solar panel called P-Series in utility solar could bring both more flexibility and larger profits for the company long-term. Capital cost to build out P-Series capacity is just $0.05 per watt and the company's Oasis power plant design has never been more efficient to design and install. The company is already adding projects for 2018 and in upcoming months I would expect further project winds around the world.

What makes SunPower lower risk than it may appear on the surface is the fact that it's 2/3 owned by French oil giant Total (NYSE: TOT) . This is Total's biggest bet on the booming solar industry and the company has given hundreds of millions of dollars in assistance to SunPower in the past and is buying projects from the company as well. Total has every incentive to see SunPower succeed and it'll help build a bridge to a brighter future for this solar company.

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The author(s) may have a position in any stocks mentioned.

Travis Hoium owns shares of 8point3 Energy Partners, First Solar, SunPower, and Total. The Motley Fool recommends Total. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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