Arizona-based First Solar (NASDAQ: FSLR) is hot.

The company reported a blowout quarter in July, with net income more than doubling in the second quarter and easily beating consensus Street estimates. In Q2, net income was $180.6 million, or $2.11 per share, compared with $69.7 million, or 85 cents per share, a year ago. The word on the Street was for earnings of just $1.65 per share.

Impressively, the company also beat top line estimates, coming in with Q2 revenue of $525.9 million. Analysts had expected a revenue of just $458.1 million.

Trina Solar (NYSE: TSL), a maker of solar photovoltaic products and a colleague of Suntech Power Holdings (NYSE: STP), issued second-quarter results on Monday after the market closed. According to Reuters, Trina Solar beat market expectations.

Revenues decreased over 26% year-over-year (according to the actual press release, revenues increased over 13% on a sequential basis). Net income was 71 cents per American depositary share (ADS). Analysts were betting on 37 cents per ADS being the likely profit figure.

China-based Suntech Power Holdings Co. (NYSE: STP) is one of China's top stocks. The country's largest solar panel maker recently took steps to increase its hold on the Chinese solar market when it reached an agreement with a unit of China Huadian Corp. to develop 500MW of solar projects in China.

The collaboration between Suntech and China Huadian New Energy Development Co. could include some of the 1.8 gigawatts of Chinese projects Suntech recently announced. According to the company, the projects resulting from those agreements could be installed between 2010 and 2012. This deal means a solid pipeline of earnings for the solar maker, and that could translate into solid earnings going forward.

On July 24, Northern California-based SunPower Corp. (NASDAQ: SPWRA) stunned the Street with a red-hot earnings beat. For Q2, SunPower reported earnings of 24 cents per share, beating consensus by 10 cents. Revenues rose 39% year-over-year to $298 million versus the $263 million consensus. The company also issued upside guidance for fiscal year 2009, seeing EPS of $1.15 to $1.60, compared to the consensus of 96 cents.

In a really bullish sign for SunPower going forward, the company also reiterated its 2009 capex guidance of $250 million to $300 million.

Also reporting after the close on July 30 was Arizona-based First Solar Inc. (NASDAQ: FSLR). Now these guys had a blowout quarter!

The company reported net income more than doubled in the second quarter, easily beating consensus Street estimates. In Q2, net income was $180.6 million, or $2.11 per share, compared with $69.7 million, or 85 cents per share, a year ago. The word on the Street was for earnings of just $1.65 per share.

After the closing bell on July 30, Massachusetts-based Evergreen Solar Inc. (NASDAQ: ESLR) reported second-quarter revenues of $63.8 million, compared to $55.8 million for the first quarter of 2009. The company's gross margin for the second quarter of 2009 was 1.9%, compared to 1.2% for the first quarter of 2009.

Unfortunately, these gross margins are way off the 34.7% we saw in the second quarter of 2008.

Before the opening bell on July 30, Northern California-based Akeena Solar Inc. (NASDAQ: AKNS) reported a 17% decline in second-quarter revenue year over year. However, like we've seen so often this earnings season, the company's cost-savings efforts resulted in a better-than-expected bottom-line earnings numbers.

Akeena reported a net loss of 9 cents per share in the quarter, a number well above the 11-cent loss expected by Wall Street.

Several high-profile solar companies recently reported earnings, and although these companies posted mixed results for the most recent quarter, there's no denying that Wall Street has been turning its face toward the sun and bidding up the shares of solar stocks.

So, what's the latest earnings front from stocks in the solar space, and why do the shares of some of the hottest solar stocks continue to shine? More importantly, should you own solar stocks right now, and if so, which ones should you make room for in your portfolio?

"The way to win in solar is to invest in the industry leaders and SunTech Power Holdings Ltd. (NYSE: STP) is a big as they come," says growth expert Toby Smith in his ChangeWave Investing.

"China will surpass the US as the world's largest market for wind turbines -- after doubling wind power capacity in each of the last four years.

"Chinese government mandates for cleaner energy are a big factor driving the blossoming wind and solar projects, but other forces are at work, too. Chinese power companies are loaded with cash and state-owned banks are eager to lend them more money.

Today's markets were under pressure most of the day after weekly jobless claims remained higher than estimates and after wholesale inflation rose more than expected. Earnings disappointments also added some pressure, yet oil rose sharply today with futures up over 10% at $38.60 late in the day after oil inventory levels were reported. Here are today's unofficial closing bell levels:

Dow 7,465.79 -89.84 (-1.19%)
S&P 500 778.93 -9.49 (-1.20%)
Nasdaq 1,442.82 -25.15 (-1.71%)

10YR T-NOTE
Top Analyst Upgrades
Top Analyst Downgrades

This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.

"If there ever was an opportunity to move energy efficiency strategies into the top-tier of national and industrial policy, it's now," says Toby Smith, referring to President-elect Obama's stated focus on renewable energy.

In his industry-leading ChangeWave Investing, which focuses on isolating emerging, long-term investment trends, he states, "The question isn't really if solar companies will benefit, but when." As a favorite idea for 2009, he looks to SunPower Corp. (NASDAQ: SPWRA).

"President-elect Obama seems to be the right person to push energy-efficiency initiatives through -- especially since he is preparing a massive stimulus program that will be unleashed soon after his inauguration on Jan. 20.

"The core of Obama's economic policy appears to be a strategy to transform the United States into an economy mostly powered by renewable and low-carbon energy generation by mid-century. This includes everything from solar to natural gas to nuclear.

President-elect Barack Obama has often repeated his stance on alternative energy. He plans to spend $150 billion over 10 years on alternative energy, not only as part of his energy independence plan, but also in order to help clean the environment, and perhaps most important of all, to create 5 million new jobs.

With Obama winning in the polls, it is no wonder that on Tuesday solar stock prices soared: SunPower Corporation (NASDAQ: SPWRA) finished the day up 14.6%, Suntech Power (NYSE: STP) also closed 13.5% higher, Evergreen Solar (NASDAQ: ESLR) closed 12.8% higher, Canadian Solar (NASDAQ: CSIQ) was up 14.7% while Trina Solar (NYSE: TSL) gained 9.1%, First Solar (NASDAQ: FSLR) 9.6% and LDK Solar (NYSE: LDK) 4.8%. In fact, over the past week, these solar stocks added about 50% to their value: ESLR +104%, FSLR +55%, STP +53%, SPWRA +51%, LDK +48%, CSIQ +45% and TSL +41%. [Solar stocks are down this morning, seems to me a "sell on the news" decline.]

With these kind of gains recently you might think you're too late, but solar stocks have actually been beaten mercilessly in the past year. While the S&P 500 declined some 31% year-to-date and the Nasdaq declined 33%, solar stocks plunged even worse: STP -75%, TSL -73%, ESLR -69%, SPWRA -61%, CSIQ -56%, LDK -50% and FSLR -34%.

Congress passed a bill that approved about $18 billion of renewable-energy tax credits after repeated failed attempts to do so this year, and now there will be an administration that -- if it sticks to its claims -- will be more supportive of alternative energy. The only question investors should ask, so which do I pick?

"Renewable fuels and clean energy, a sector beaten down hard since last fall, are now primed for a major comeback," says Eric Roseman, editor of The Commodity Trend Alert. Here's his ETF play on the sector.

"With every passing day the price of crude oil rises, the secular trend to alternative energy becomes even more powerful. Consumers, companies and governments are now sick and tired of soaring energy prices.

"The long-term solution is to obviously reduce our dependence on oil and increase our consumption of renewable fuels like wind, solar, and nuclear energy.

"The bull market in alternative energy began in 2005 when a host of companies in this thriving sector went public, supported by government subsidies, especially in Germany and Spain. Interestingly, Germany and Spain have just reduced solar energy subsidies this spring.

"In my view, those subsidy cuts don't matter at this stage. When companies in the solar sector are making money, why should governments continue subsidizing them?

"For those who want to 'go green' there are new opportunities to tap the environmental trend by adding cutting edge, alternative energy ETFs to your portfolio," says Doug Fabian, editor of Successful Investing.

"ETF providers are starting to latch onto the green theme. Two fund families, PowerShares and Market Vectors, have created their own classes of clean energy ETFs. A pair of ETFs has been launched in the narrow but potentially profitable niche of solar energy.

"The Claymore/MAC Global Solar Energy Index ETF (NYSE: TAN) is designed to track 25 companies in the solar power industry. Sectors included in the ETF are equipment producers, companies that concentrate on selling electricity, and suppliers of materials or services, installation, integration or finance. TAN currently invests in companies such as MEMC Electronic Materials, Suntech Power Holdings, and LDK Solar Co. Ltd.

"Van Eck Global launched the Solar Energy ETF (ASE: KWT). That solar energy ETF seeks to replicate the price and yield performance of the Ardour Solar Energy Index, which includes companies that generate at least 66% of their revenues from solar energy. The four top holdings are First Solar, Germany's Q-Cells and Solarworld AG, and Norway's Renewable Energy.

LDK Solar Co. (NYSE: LDK) is one strange solar stock. Yesterday, on a day when other solar companies like Solarfun Power Holdings (NASDAQ: SOLF), Canadian Solar Inc (NASDAQ: CSIQ), First Solar Inc (NASDAQ: FSLR) and JA Solar Holdings (NASDAQ: JASO) were all strong and despite earnings coming in at the high end of expectations and guidance solidly ahead of estimates, their stock was down. Not only was it down, but it also tried rebounding, only to fail. Not good at all for the bull case.

Experience has taught me to respect the price action the day after earnings. So when I see LDK trying to break out of a now 5-month old range, pretty much between $30 and $40 -- yes it was up to $50 in January and $20 in March, but those are outliers -- this is a very bearish sign. It's so bearish that I suspect that unless solar plays really heat up again, this stock will need many more weeks or months to break $40, and even then, it's got a ton of resistance all over the place due to bitter buyers in at much higher prices who will be looking to cut their losses.