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On Jul 17, Zacks Investment Research upgraded SunPower Corporation (SPWR - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

This solar cell producer delivered positive earnings surprises in three out of the last four quarters with an average beat of 105.92%.

SunPower Corp.’s consistent research and development efforts to improve solar cell efficiency have yielded positive results. The solar panels produced by the company have one of the highest conversion rates and generate more than 50% energy than conventional panels.

The increasing focus in the U.S. on green energy will see more and more power being produced from solar cells. The high conversion capacity of SunPower’ solar panels will play a vital role in the U.S. solar industry. A major housebuilder KB Home (KBH - Analyst Report) has partnered with SunPower to build more than 1,500 solar energy powered homes across the country.

SunPower solar cells are thus gaining traction in the U.S. Recently, SunPower and Bechtel Corp. installed 749,000 solar photovoltaic (PV) modules at the 250 MW California Valley Solar Ranch (CVSR) PV plant. The plant owned by NRG Energy Inc. (NRG - Analyst Report) will be operated jointly with SunPower for the next two years.

As per a recent report from the U.S. Energy Information Administration (EIA), total solar generation in the U.S. in 2013 will be only 0.2% of the total power produced. However, solar generation is expected to grow by 79% in 2013 and 49% in 2014. SunPower panels will definitely play a vital role in the generation process.  

Moreover, SunPower’s strategic decision to produce solar panels from low-cost production regions like the Philippines and Malaysia gives them an added cost advantage over its solar cell manufacturing peers.

Besides SunPower Corporation, other operators in the industry having a favourable Zacks Rank are JinkoSolar Holding Co., Ltd. (JKS - Snapshot Report) and Yingli Green Energy Holding Co. Ltd. (YGE - Snapshot Report). Both these companies currently retain a Zacks Rank #2 (Buy).

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