The solar sector took a severe beating in 2011 as module prices fell by more than 40%. The bleeding has stopped for now, and most of the solar makers have worked through their inventory problems and are looking forward to some improvement in the coming year.

It’s not to harsh to say that analysts have gotten pretty fed up with the solar makers. Price targets fell so low that they might have lost all meaning. Many of these companies have now risen past their targets, but it’s less a function of good performance and more a function of low expectations. We’ve looked nine solar-related companies to see what might be in store for them this year.

The stocks we’ve looked at are Applied Materials, Inc. (NASDAQ: AMAT), First Solar, Inc. (NASDAQ: FSLR), MEMC Electronic Materials, Inc. (NYSE: WFR), GT Advanced Technologies, Inc. (NASDAQ: GTAT), SunPower Corp. (NASDAQ: SPWR), Suntech Power Holdings Co. Ltd. (NYSE: STP), Trina Solar Ltd. (NYSE: TSL), LDK Solar Co. Ltd. (NYSE: LDK), and JA Solar Holdings Co. Ltd. (NASDAQ: JASO).

Applied Materials, Inc. (NASDAQ: AMAT) has a consensus target price of $14.47, and shares are trading today at $12.84, for an implied gain of 12.7%. Applied is the only company in this group that pays a dividend. The company hammered expectations in its first fiscal quarter and forecast revenues and earnings for its second quarter that were also above existing estimates. Demand for smartphones and tablets appears to be driving demand for the company’s foundry equipment, while Applied’s solar business posted revenue for the quarter that amounted to just a third of the division’s revenue in the same period a year ago.

First Solar, Inc. (NASDAQ: FSLR) has a consensus target price of $43.55, and shares are trading today at $40.78, for a potential upside of 6.8%. First Solar is the largest of the solar panel makers measured by market cap. The company’s low-cost leadership has been challenged by the constantly falling prices of crystalline solar manufacturers, and there’s little reason to expect a dramatic change here. A target price rise to $50 or so is likely, but could be out of reach.

MEMC Electronic Materials Inc. (NYSE: WFR) has a consensus target price of $6.14, and shares are trading today at $4.55, for an implied gain of 35%. MEMC posted a loss in its most recent quarter on soft demand for its chips. The company, like First Solar and SunPower, also owns a solar project development company, SunEdison, but there are scant hopes for any growth in utility-scale solar developments. Installations of rooftop systems may increase, but so far only SunPower has made any substantial move in that direction.

GT Advanced Technologies, Inc. (NASDAQ: GTAT) has a consensus target price of $12.70 and shares are trading today at $9.29, for an implied gain of nearly 37%. The company posted better-than-expected earnings for the fourth quarter, but didn’t offer an upside surprise on guidance. Formerly known as GT Solar, this company had a breakout first half of 2011 as the expansion of China’s manufacturing capacity created high demand for GT’s specialized manufacturing equipment. Now that capacity exceeds demand, new orders have slowed and prospects for growth are dimming.

SunPower Corp. (NASDAQ: SPWR) has a consensus target price of $9.70, and shares are trading today at $8.33, for an implied gain of 16%. SunPower made about 50% of its revenues in the last quarter from installing residential and commercial systems. For now, this is where the money is. Provided the company can continue to grow its installation business, the target price is within reach — maybe even likely.

Suntech Power Holdings Co. Ltd. (NYSE: STP) has a consensus target price of $2.57, and shares are trading today at $3.61, signalling at least a fully valued stock. Suntech is the world’s largest supplier of solar panels, and a burst of installations in Germany ahead of that country’s subsidy cut in April has helped Suntech. The company has also reduced its inventory overhang and could be poised for a modest uptick in business.

Trina Solar Ltd. (NYSE: TSL) has a consensus target price of $9.15, and shares are trading today at $9.98, again signalling a fully valued stock. Trina shares are up more than 47% since the beginning of the year. Like Suntech, Trina is a low-cost, high-volume maker of solar panels and it faces all the same problems. One could argue that the target price should be higher, but a sobering question would be, “For how long?”

LDK Solar Co. Ltd. (NYSE: LDK) has a consensus target price of $3.25, and shares are trading today at $6.34, indicating yet another fully valued stock. Shares are up more than 50% year-to-date, most likely on a statement from the Chinese government that it plans to double solar installation this year. That could happen because China needs to boost its manufacturing again and the country is making some monetary moves that could drive solar investment. LDK, Trina, Suntech, and JA Solar would all get a nice bump if the government comes through.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) has a consensus target price of $2.25, and shares are trading today at $2.12, indicating a potential gain of about 6%. Shares are up 57% since January. One could argue that JA Solar’s target price will have to rise, but here again, which of the Chinese makers gets the government’s solar installation business this year will be the determining factor in which of the Chinese makers succeeds and which don’t.

Target prices have been breached throughout this sector primarily because analysts kept lowering the bar to meet diminishing expectations. Share prices have been advancing, but perhaps more quickly than the underlying business would warrant. Most solar watchers expect an uptick in business during the second half of 2012, but the first half of the year is when these companies usually generate most of their revenue and profits.

Making an investment in any of the Chinese companies is nearly pure speculation at this point. A significant point to recall is that the debt load of these companies should be discounted when looking at a possible play here. Even with that, none of the Chinese solar makers looks like a genuine possibility for significant growth.

Among the US companies, only SunPower has managed to get itself into a position to take advantage of the latest financing schemes, which favor residential and commercial installations over utility-scale projects. Applied Materials, of all these stocks, looks like the best bet because it has found a way to replace its solar business with products that people want — smartphones and tablets.

Paul Ausick

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