7 Reasons to Shut Out Solar Stocks

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The once scorching-hot alternative energy sector has cooled off, and last week's wave of largely grim earnings reports reveals that things aren't going to get better anytime soon for solar stocks.

Things were already not exactly looking up for the niche, as seven publicly traded players were all expected to post lower bottom-line results than they did a year earlier.

Reality proved to be even uglier, with all seven of the companies delivering sharply deeper deficits than what even worrywart analysts were targeting. If you can stomach the disappointment, let's go over the carnage.

Company

EPS

EPS est.

Last Year

JinkoSolar (NYS: JKS) ($1.86)$0.50$1.75
Trina Solar (NYS: TSL) ($0.45)$0.04$1.08
Canadian Solar (NAS: CSIQ) ($1.02)($0.39)$0.47
Hanwha SolarOne (NAS: HSOL) ($0.33)($0.08)($0.06)
Suntech Power (NYS: STP) ($0.64)($0.26)$0.18
JA Solar (NAS: JASO) ($0.36)($0.02)$0.47
Yingli Green Energy (NYS: YGE) ($0.18)($0.02)$0.49

Source: Yahoo! Finance.

Most of these former speedsters were squarely profitable a year ago, and now analysts can't whittle down their prospects fast enough. You don't need a clearer sign to stay clear of this space than that. The fundamentals are crumbling faster than the pros watching this space were expecting.

Don't let it be you catching this falling knife.

However, there will come a time when investors will inevitably want to get back into solar. You'll want to be a buyer when the European sovereign debt crisis passes, giving Germany and other euro nations the flexibility to invest in clean energy solutions again. China itself has some growing pains to overcome as well.

This will be a very important sector, but it's still too soon to go bottom fishing. Wait until analysts begin underestimating the bottom-line potential here. At least then you'll know that Wall Street will be chasing solar energy in the right direction.

Want to stay on top of solar energy? Track the latest developments by adding these stocks to My Watchlist.

At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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