A touch of solar for the oil blues

• Buy 200 shares of MEMC Electronic Materials (WFR, news, msgs) at the open.

At what point will the high price of oil begin to seriously impact the stock market? That is the question on the minds of most investors I talk to these days.

Most are surprised that the indices have held up as well as they have given the backdrop of higher energy prices, rising inflation and lower consumer spending. I have to say I'm a little puzzled myself.

But forecasting the economy, oil prices or consumer spending trends isn't what we do here in Strategy Lab. We pick stocks. In my case, stocks that are beaten up but ready for a recovery.

While I'm not leading this contest, the Dog Pound has bounced back nicely over the past couple of months and now sits with a gain nearly twice that of the S&P 500 ($INX).

I'm sitting on a pile of cash right now because I'm not comfortable with the current market backdrop. But if I'm going to take the next step forward and challenge the leaders of this contest, I need to put some more cash to work.

Thinking solar

I'll do so slowly, and I'll do so by starting with a 200-share purchase of MEMC Electronic Materials (WFR, news, msgs). The company's purified silicon wafers are in high demand in the solar industry -- an industry that is expected to boom, given the rapidly rising costs of oil. Capacity and production concerns have weighed on the stock in recent months, but the long-term growth prospects are enormous.

A strong management team and impressive balance sheet are two more reasons to like the stock. Finally, after a corrective retreat, the stock is showing signs of turning around. I'll buy at Monday's open, with a six-month target of $85 per share.