Trina (NYSE:TSL), SunPower (Nasdaq:SPWRA), RenaSola (NYSE:SOL), MEMC (NYSE:WFR) Barclays (NYSE:BCS) Top Solar Picks

With demand potential as the defined parameter, along with demand outside of Germany, Barclays said their favorites in the solar sector are Trina (NYSE:TSL), SunPower (Nasdaq:SPWRA), RenaSola (NYSE:SOL) and MEMC Electronic (NYSE:WFR).

Barclays said, "In this volume of Cleantech Insights, we take a look at the 2011 demand potential, particularly of the US and other non-German solar markets. We also provide an overview of the smart grid spending breakdown by key segments. Investor sentiment is at all time lows and recent extension of cash grants in the US is an incremental positive, in our view. Maintain constructive bias on Trina, SunPower, RenaSola and MEMC Electronic. We see near-term downside risk in the case of Jaso Solar (Nasdaq:JASO), Energy Conversion (Nasdaq:ENER) and Evergreen Solar (Nasdaq:ESLR).

"What to do with solar stocks: Data points so far suggest Q1 pricing environment could turn out to be better than most skeptics think. That said, fundamentals would be less important for share price performance until the sector backdrop starts improving. Policy related news flow (particularly from Europe) has been generally negative over the past 6 weeks (Germany, Czech Republic, France, Belgium and Australia). However, with the extension of cash grants program in the US, we expect the backdrop to start getting better. China, India policy support along with resolution of European political uncertainty could drive improved investor sentiment, in our view.

"Solar capex plans: According to company reports, 7 of the 11 solar players were free cash flow positive during Q3, while 5 of these 11 companies (TSL, Suntech (NYSE:STP), China Sunenergy (Nasdaq: CSUN), SOL, and FSLR) have been free cash flow positive for the first 9 months. For 2011, we expect solar companies to spend - $3.8 billion in capex, representing - 30% YoY growth."

MEMC closed Monday at $11.84, down $0.19, or 1.58 percent. SunPower ended at $13.58, down $0.20, or 1.45 percent. RenaSola was down to $8.30, dropping $0.45, or 5.14 percent.