Price spikes earlier this year bought unprecedented interest in green energy firms, but the correction from highs of around $150 a barrel to the current rates of $109 a barrel for October delivery have slowed the influx of interest and money. Yet with little, if any, resolution to the major energy problems that prompted the inflated prices, the recent dip may make this an ideal time to invest in solar power.

As much as the meteoric rise in oil prices represented an economic bubble, these recent declines in solar stocks might represent a short-term price fluctuation. Despite lower prices and a continued lack of restrictive carbon caps scheduled for the world’s largest energy market, many of the things that make solar an appealing energy solution also make it an appealing stock buy.  

While some of the most immediately appealing aspects of solar power (such as an anticipated flurry of government subsidies) have fallen back in recent months, research at investment firm Merrill Lynch indicates that despite some aggressive shorting in anticipation of a crash, reliable demand for solar technology is keeping prices high. And the long-term outlook for solar remains good. “We find it hard to believe that the world’s energy problems and global warming issues were solved last quarter,” say ML analysts.

Solar stocks also seem to be flourishing worldwide. In the past fiscal year, many American solar companies benefited from a comparatively weak dollar.  Widespread European subsidies for clean energy and a favorable exchange rate for European buyers brought prosperity to American firm FirstSolar, but as the dollar recovers, many Chinese and European firms look ready to take advantage of a more competitive market. 

Perhaps the most striking indication of the current state of solar power is that it’s tagged as a better buy than the reliable semiconductor industry. P/E multiples (a calculation of how much a share of a given stock costs) divided by recent earnings indicate that solar stocks are, collectively, a better buy than semiconductors.  This is especially promising for a market widely predicted to increase by more than 50 percent in the coming year. 

While energy prices are currently dipping, they remain reliably higher than at any point in the past. And with several protracted political struggles looming around one of the world’s largest oil producers, markets still unsure what to make of the global financial situation and energy demand unlikely to decrease, solar seems to be one of the most reliable buys in an era of uncertainty.

Photo by Flickr user Jimmy Joe