Solar Stocks Up, Anticipating Obama Victory

Solar stocks Tuesday have extended Monday’s torrid rally, apparently getting a boost from investors anticipating that a victory Tuesday for Democratic presidential candidate Barack Obama will be good news for the alternative energy business. But before you jump in, you might want to think for a moment about what will actually transpire - and on what timetable.

While it may be true in the long run that an Obama presidency will be good for solar shares, a change of administrations will not be a cure-all. Raymond James analyst Pavel Molchanov Tuesday morning cautioned that investors should not expect any “instant gratification in terms of new goodies from Washington,” especially given that Congress has already approved an 8-year extension of the solar investment tax credit.

“We agree with the general premise that an Obama White House/Democratic Congress combination sets up the prospect for a greater amount of federal action on the renewables front than would be the case under Senate McCain,” Molchanov writes. “However, we do not envision immediate action (within, say, the first 100 days) on these issues. To put it bluntly, while solar and wind are important, there are much bigger things on the plate that policymakers in the U.S. are understandably focusing on within the context of the global financial crisis.”

Several analysts have written bearish commentaries on the solar stocks over the last couple of weeks, citing the negative implications for the solar business of the rally in the dollar and tightening credit markets. And while the bears can’t be too happy today, don’t lose sight of the fact that most solar companies get the vast majority of their business from Europe; it will take a big yet-to-be-created program to drive U.S. solar installations high enough to offset the expected near-term weakness in Germany and other European markets.

In Tuesday’s trading:

• First Solar (FSLR) is up $15.63, or 9.7%, to $177.54.
• Suntech (STP) is up $2.99, or 16.7%, to $20.81.
• SunPower (SPWRA) is up $6.99, or $15.9%, to $51.07.
• Canadian Solar (CSIQ) is up $1.92, or 17.6%, to $12.82.
• Evergreen Solar (ESLR) is up 80 cents, or 17.1%, to $5.49.
• LDK Solar (LDK) is up $2.59, or 11.6%, to $25.
• Energy Conversion Devices (ENER) is up $5.15, or 13.1%, to $44.49.
• GT Solar (SOLR) is up 52 cents, or 10.4%, to $5.53.
• MEMC (WFR) is up $2.11, or 10.8%, to $21.62.

Comments

[John Cordes:]

Being as how your last article entirely missed the massive two day run up in this sector, and your strong opinion was for more contraction and doom, I find it quite amazing that once again you poop out yet another article spreading caution and more negativity without even mentioning your negative analysis and advise was a bust. Could you be wrong once again? or what, trying to cover shorts?

2008 Nov 05 08:36 AM

[Bob55:]

Change is what America voted for last night and it is with great hope that change comes quick. Change in how Wall St. works and making the country financially strong again. Equally important, if not more so, is change in America's environmental policy and solar and wind is expected to be at the forefront. Having Obama and Congress push solar, wind, and other forms of alternative energy with real concrete projects perhaps as early as the rollout of the next stimulus package if not sooner would be a significant boost. We should find out soon enough.

2008 Nov 05 09:32 AM

[ALLYOUFOOLI...:]

hey savitz, you mindless robot. the market's runup was Not because of nobama.It was the hope that McCain would pull out an upset victory favorable for the markets.When that didn't happen,the rsulting sell off,the last 2 days,is the disappointment of investors and traders of who won the election.The rest of the world markets realizing this also caused their sell offs.

2008 Nov 06 04:36 PM