After a Beating, Solar Energy Is Ready to Shine 24 comments
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Like any other solar companies in the market, Canadian Solar (CSIQ) stock has been down from a 52 weeks high of $50 to the current $4/share. Canadian Solar is not alone. Take a look at Suntech Power (STP) stock, down 95% from $90 to $7; LDK Solar (LDK), down 95;, Energy Conversion Devices (ENER), down from $80 to $25, Sunpower (SPWRA), from its 52 week high of $130 to $32/share; First Solar (FSLR) slid from $300 to $130; and Yingli Green (YGE) down from $40 to $4. In other words, the whole solar sector is punished by the market.
The crashing oil price is one reason behind selloff in the solar stocks, as many believe that solar energy has to compete with crude generated electricity. The fact is that the cost of solar energy has nothing to do with crude price. With solar wafer price coming down sharply. silicon based PV panel makers such as Canadian Solar and Suntech Power are here to benefit in 2009. The second reason investors avoided solar stocks is the whole market condition was worsening during the last 6 months. Every single sector was experiencing selloff, including solar sector.
I am going talking about Canadian Solar here as this is a very intersting company in the sector. The company is headquartered in Canada and takes advantage of low cost manufacturing in China, yet the company is well positioned to the North American market as trading ties have been recently strengthened by President Obama and Prime Minister Steven Harper.
We knew 2008 was a bad year for solar companies, as many posted dismal earnings in Q4 2008. The key is the 2009 outlook. Canadian Solar recently said Q4 2008 earnings will be on the lower side, but the company said sales contracts for 2009 have reached 262 MW, with an additional 190 MW in the near-term pipeline, that could easily top 450MW in near term. Analysts predicted sales in 2009 between 300MW and 350MW. Overall, Canadian Solar is likely well positioned to outperform in 2009. There was a recent call by Jon Najarin on CNBC that CSIQ is a great buy at this level, while President Obama pushes the US into a green energy era.
With stimulus money under the way into the economy, the demand of crude is rising. The crude price has jumped off its low and is approaching $40 per barrel. Most importantly, the $43B investment into energy technology, including $20 billion in tax incentives for renewable energy by the Obama administration, is the ultimate boost to the solar sector. Investors should notice that the European total solar incentive of the last 5 years is estimated at less than $5B. In other words, $20B in the stimulus is enormous for this industry, on top of that, we have the Chinese stimulus package, in which over RMB$100B (~US$13B) is dedicated to renewable energy.
We are in an unprecedented age of green energy with governments around the globe pledged to support renewable energy. Investors should take advantage of this historic low stock price in front of next booming sector. Canadian Solar is definitely a great buy here.
Disclosure: long
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On Feb 25 01:54 PM Ricard wrote:
> I would like to believe this article. However, there are some key
> details missing from the analysis.
>
> For instance, the author brings in YGE, but that is a Chinese solar
> company. The US stimulus is unabashedly MADE IN AMERICA - focused,
> meaning that companies in China would benefit very little.
>
> Furthermore, some of these companies do not have very strong balance
> sheets. This crisis is global, and everything (except gold and treasuries)
> has had a correlation close to one. Solar being a relatively new
> sector in terms of growing size, it stands that it would benefit
> the most in a bull, and be the first to be cut in a bear. That has
> certainly played out in the past half-year.
>
> Essentially, all I am saying is that the article does not change
> my position or opinion of solar stocks one bit. There is simply too
> little information in it to consider it as any more than talking
> book.
STP getting there imo, may join LDK around $5, which is incredibly "cheap" based on outlook for the next 3-5 years... that one could be a monster going forward
buy 1/2 now, 1/2 on next capitulation on any of these imho
I think you missed the point in the article, that China also is subsidising renewables in a big way. China and the U.S. had the biggest increases in wind energy last year also.
+ 8.3 GW capacity in the U.S. and over 6 GW in China.
It will be years before any States to consider no matter how the federal gov encourages it. That's why recently solar shares are so miserable because people knows that fact.
Meantime, just forget it.
Solar will burn your portfoilio badly.
Last year, I thought it had a chance to join the rest of the Crowd with a loss of 80% from its peak of $300 or $60, this includes overshooting to the downside.
On a purely contrarian point of view, the squishing of FSLR could be the final gasp to the downside for the Sector. PZL, anyone?
However, expect more black-eyes in the near term for solar as some of the leading PPA providers will be exposed for what they are: economic disasters, that were looking to go public before the "music stopped"--it stopped in September 2008 and the exits are now blocked...there is no escape for them.
Dig around a little...quite of few RFP bids (PPA offers) are being subpoenaed and what comes out of the investigations will not be pretty.
I'm going back to bed now. Wake me when solar actually takes off.
We have plentiful of this gas to last for over 200 years or longer.
Cars should be built to use Natural Gas, which will burn lot more cleaner.
Solar should be encouraged for homes and some public & private buildings.
That will be the most practical solution.
I would venture that clean burning LNG powered cars are also less polluting than even Hybrids, as they still run on gasoline.
I look for somekind of middleclass back lash against Hybrids and their cost to tax payers. LNG power for our transportation fleet;
-abundant supply in USA, offshore and on,
-low cost production,
-is not priced by OPEC,
-is priced in No. American market,
-in 08 was cheaper in No. American than on world market,
-LNG powered cars are lower cost than Hybrids,
-LNG powered cars do not require taxpayer subsidy's from workers.
try American Solutions if you want a better forum for the future of America, SA is mostly short sellers and socialists promoting gov subsidy's of their future investments.
We are about to waste another $20 Billion minimum on GM and Chrysler then because neither one has a Gas powered car in their future.
Hybrid yes, NG no.
In fact, I do not know of any auto manufacturer with an NG car on the drawing board let alone, ready to introduce one.
Have either of you seen any more of TBoone's ads?
Several years ago, they had several models available in the US, but all the manufacturers have withdrawn their CNG vehicles from the US market except Honda, which limits the CNG Civic to sales in California. You can still find these models available used, for instance at www.cngmotors.com/. They were CNG adaptations of standard gasoline vehicles, so they could bring them back to market relatively easily and quickly if there were demand for them.
It is true that the US spending on renewables will be accretive to the sector on the whole, but there is already evidence of demand abating in Europe (in Spain in particular) which is the larger market. The oversupply situation must be resolved before any of these securities will head higher (either through bankruptcies or consolidation).
GM does build NG powered engines overseas.
During the 1980's, many shops in Canada would convert cars to burn natural gas instead and the cost was about $1400 then.
Of course today's technology should do a much better job than the old days.
The most important point is, oil money stays home instead of going to OPEC.
End results are, more American jobs here, less control by OPEC etc, and a cleaner environment.
It doesn't matter, Neither GM or Chrysler will mass produce a NG vehicle in the US until after the 2012 season.
Ford does not have one either. The facilities would have to be retooled. I do not have a clue as to what else would have to be done, like spare parts suppliers, but It Isn't going to be done.
The Viability Plans being reviewed do not Include NG.
Maybe with Oil above $100, serious consideration will be given but not now and not for the foreseeable future, say 24 months from now.
Serious Consideration means millions of NG cars produced in the USA alone, not just on the entire Planet.
Besides, after TBoone's company goes bellyup, all ads for NG cars will never again resurface. IMO
I get the picture. It's sad to see the Big 3 without any future plans for NG powered vehicles. That's why they are always behind Japan or Europe in new developments. Won't be surprised to see China coming out with better ideas and products in the near future. China already selling jetliners to eastern European countries and Africa, same size as Boeing 707 but alot cheaper and hi-tech too. With GE building jet engines in China, won't be long for Boeing to feel the competition.
America used to be the LEADER, but now, we become the FOLLOWER.
That must change. Hope that's the kind of "change" we heard about.
when this will happen? i believe it is when oil gets high again. solar went up when oil was high and went down when it dropped. also, there is more incentive for solar in europe. where coal is not popular, and the solar industry has been active as an alternative. wintess germany, spain, and italy. also, china is going big on alternative energy.