So you have decided to pick up a few shares. Your decision was probably fueled by the positive outcome of the recent UN Climate Change Conference and the favorable tax reform (namely, the extension of the ITC, which gives a 30% tax credit on solar farms, by 5 years). The solar stocks are heading into the stratosphere today: (Source: Bloomberg)Note: in the chart above, we compare daily returns of Sunedison Inc., SunPower Corporation, First Solar Inc., Canadian Solar Inc., Trina Solar, and JA Solar Holdings against the price changes in the S&P 500 Index. Keep in mind that we are excluding Sunedison Inc. from the comparative analysis because we have a very bearish view on the stock purely from a financial point of view.Out comparative analysis will include three parts: (1) operating metrics and growth, (2) financial position and credit risk, and (3) relative valuation. All data are provided by Capital IQ. So, let us begin. Operating and Growth Metrics (Source: Capital IQ) Key takeaways: - First Solar scores the best margins across the pack but moves down the list when it comes to revenue and EBITDA growth; - Trina Solar has shown the best revenue growth over the last twelve months (at over 30%), while JA Solar posted the best EBITDA growth among peers (over 52% on LTM basis), scoring third in revenue growth; - The loser in the game is, undoubtedly, SunPower Corporation - it moves down the list as we approach the bottom line. The company has shown negative growth in terms of revenues and a pretty bad EBITDA growth over the last twelve months; - Canadian Solar seems to be a dog here: the company cannot boast attractive margins, while its growth is also mixed (a great increase in sales but the worst growth in the bottom line); - JA Solar probably has the most efficient cost structure: although the gross profit margin is the lowest in the pack, its EBITDA, EBIT, and net income margins are decent, while revenue and EBITDA growth rates are attractive. To sum up, First Solar is the star on the list, while Canadian Solar is the dog. Trina Solar and JA Solar are more or less decent choices - nothing extraordinary but strong margins and growth rates, nevertheless. SunPower is the outsider here. Financial Position and Credit Risk The following panel shows the chosen companies' credit scores: (Source: Capital IQ) From the pack, First Solar has the best credit score, while Trina Solar Ltd. has the worst. Of the entire comps list, only Canadian Solar has a credit rating - a BB rating from S&P. Not let us turn to some liquidity, debt, and leverage ratios: (Source: Capital IQ. Inforgraphics by author) Key Points: - The most leveraged company on the list is Canadian Solar, while First Solar is the least indebted. On the other hand, Canadian Solar has the best conversion cycle (the amount of days external financing is needed - i.e. short-term loans used in working capital) and the second-highest interest coverage ratio; - First Solar has the best liquidity and leverage ratios (in fact, it has a negative net debt which is why there is an NM rating for the Net Debt/EBITDA category) but it also needs to improve the cash conversion cycle, which is the longest on the list; - SunPower Corporation is the second least-indebted company on the list but its interest coverage ratio leaves much to be desires. Trina Solar has the worst liquidity among peers, even though its cash conversion cycle is the second-best. Its debt ratios are rather alarming, too.Overall, the winner here is First Solar: the company has the most liquidity, the best debt ratios, and the best leverage ratios. Canadian Solar seems to be the riskiest one with the most relative debt and poor liquidity ratios. On the other hand, the rating agencies do not raise red flags on this stock, and its leverage ratios are comfortable. JA Solar is the "golden mean" here: its indebtedness is in check, its liquidity is ok, and its leverage ratios are not too bad, either. Relative Valuation (Source: Capital IQ) Results: - SunPower Corporation has the highest valuation among selected peers in all categories. Keep in mind that it also has the worst operating results and mediocre credit ratios. On contrary, JA Solar has the lowest valuation (also remember that it is a Chinese company, just like Trina Solar, and, to an extent, Canadian Solar); - First Solar has the most attractive valuation given its growth rate and operating margins. I find Canadian Solar fairly valued among peers given its mediocre results over the past twelve months and a very leveraged capital structure; - Trina Solar could be valued higher but, in my opinion, the market gives it a discount in view of its liquidity situation. Purely based on the above analysis, our top pick is First Solar, Inc. We consider it the "growth stock" of the list. We recommend value investors to look closely at JA Solar, which may be improperly valued due to the "Chinese company" stereotype. We consider it a "value play" in the pack. I am personally bearish on SunPower Corporation because of its poor operating results and an unjustified relative valuation in the absence of material non-financial information.