Solar 2009: Investment Opportunities in Solar Stocks- Part I

The last panel I attended at Solar 2009 focused on investment opportunities in Solar. This is the first of several entries with ideas from the speakers. They were:

• Allen Goodman, of ECG Consulting Group
• James Groelinger, of Bellegrove Associates
• J. Peter Lynch, of Salem Financial, Inc.
• Pradeep Haldar, Ph.D., MBA of the University at Albany

Each had perspectives on the solar (mostly photovoltaic [PV] industry, and struck me as very knowledgeable in the field. The caliber of the industry and investment knowledge on display impressed me, so I'll share with readers some of the panelists thoughts.

Peter Lynch on the Solar Sector

• Wall Street likes “techie glitz” of PV because it means they really don’t have to focus too much on reality.
• In the last 8 weeks, solar stocks have gained 72% on average. This is unsustainable.
• Solar Stocks have a very bright future, but you'd better be a trader.
• All stocks took off in early March. When stocks move the good ones move first, and others get swept up. I believe that the Solar stocks were ones that got swept up.

Allen Goodman on the Solar Sector

• There are lots of claims [of low-priced PV modules.] If they can [produce them at that price], that's great, but the challenge is on the companies.
• The key to picking profitable solar companies is to look for ones with key differentiating factors. For developers, this may be the ability to have a relationship with a customer, obtain financing, and do permitting. The other end of the spectrum is to have an edge with technology.

Investment Action

I agree with Lynch that if you're going to make money in Solar stocks today, you have to do it as a trader. I also agree that the current move is unsustainable (I recently called it a bear market rally.) So if you are a trader, the trade today should be on the short side. Future articles in this series will have a couple of stocks that the panel panned, or you can short the sector as a whole, with either of the Solar ETFs, TAN or KWT.

DISCLOSURE: None.

Comments

[bartpr:]

there are forces in play in china that are feeding this industry. namely, solar is the quickest way to build out electric power to its many distant provinces. they have announced a solar expansion program.. this has nothing to do with us buildout or the admins alternative energy program.

May 17 01:30 PM

[tessant:]

thanks for the update from the conference. appreciate it.

May 17 01:59 PM

[billp37:]

Konrad and Peterson

The Plug In Vehicle Scam

seekingalpha.com/artic...

may be doing bad things to altenergy.

EET may be contibuting to altenergy scams?

Chevy Volt's success hinges on its battery

www.eetimes.com/rss/sh...

May 17 07:12 PM

[Gregman2:]

Many of China's thin film and PV manufacturers are still operating at about 70% of capacity and are hungry to develop the U.S. market. Look for smaller emerging companies like Chint and funds like Cybernaut to shine as the housing market begins to recover in mid-2010.

May 17 09:50 PM

[billp37:]

Mr Konrad

Please try to resolve solar/wind electric energy output with BTU input.

fast neutron
Santa Fe, NM
January 12, 2009

From actual experience, wind farms produce 1.2 watts per square meter. Solar Thermal and Photovoltaic methods capture 5 to 6 watts per square meter. There is no economy of size in either technology. Dividing the watts you need by those values gives the land area in square meters needed to produce the juice. The numbers are astronomical

www.topix.net/forum/so...

www.nafa.org/Template....

Gasoline Gallon Equivalent (GGE) Table

Fuel TypeUnit of Measure BTUs Per Unit Gallon Equivalent

Gasoline, regular unleaded, (typical) gallon 114,100 1.00 gallon

Gasoline, RFG, (10% MBTE) gallon 112,000 1.02 gallons

Diesel, (typical) gallon 129,800 0.88 gallons

Liquid natural gas (LNG), (typical) gallon 75,000 1.52 gallons

Compressed natural gas (CNG), (typical) cubic foot 900
126.67 cu. ft.

Liquefied petroleum gas (LPG or propane) gallon
84,300 1.35 gallons

Methanol (M-100) gallon 56,800 2.01 gallons

Methanol (M-85) gallon 65,400 1.74 gallons

Ethanol (M-100) gallon 76,100 1.50 gallons

Ethanol (E-85) gallon 81,800 1.40 gallons

Bio Diesel (B-20) gallon 129,500 0.88 gallons

Electricity kilowatt hour 3,400 33.53 kwhrs

Mr Peterson may have a point.

The Plug In Vehicle Scam comment.

Listen up America – It's a scam! The emperor has no clothes! There is no such thing as a cost-effective electric vehicle that will carry a family of four at highway speeds. But the cautionary if not downright conservative analysis from sources as diverse and credible as the Department of Energy, the White House and Carnegie Mellon University somehow manages to get lost in a media sideshow that focuses on scientific breakthroughs that promise a 5-minute recharge time for batteries nobody can afford to buy.

seekingalpha.com/artic...

Let's all try to figure out what is going on.

Mr Peterson may be right. A scam?

May 17 09:59 PM

[one eye:]

Of the many plans for energy efficient cars, there are really only 2 varieties which have supercharged new models: Electrics and Hybrid variations.

Some of Toyota's models include Solar panels in the roof to supplement the electrical power needed for heating/cooling.

The smaller the country, the greater the likelyhood of all electric use.

May 18 01:52 AM

[Windsun33:]

Those rooftop solar panels are only for powering up the little 3-watt fan for keeping the car cool in the sun. They do nothing at all beyond that. Even if the entire car were covered with solar panels, and you had sun on all 5 sides, it could only supply about ..12% of what the car needs to actually move the wheels.


On May 18 01:52 AM one eye wrote:

> Some of Toyota's models include Solar panels in the roof to supplement
> the electrical power needed for heating/cooling.
>
> The smaller the country, the greater the likelyhood of all electric
> use.

May 18 09:09 AM

[Milind Para...:]

Some solar stocks like STP, LDK, SOLF, are to announce their qaurterly numbers on 21st. May. These stocks have been swept up..no any solid fundamentals...Short them to gain :)

May 18 09:30 AM

[The Geoffster:]

Heresy, heresy, billp. The lefties don't like facts interfering with their religious views. Watch out for black SUVs driving down your street.


On May 17 09:59 PM billp37 wrote:

> Mr Konrad
>
> Please try to resolve solar/wind electric energy output with BTU
> input.
>
> fast neutron
> Santa Fe, NM
> January 12, 2009
>
> From actual experience, wind farms produce 1.2 watts per square meter.
> Solar Thermal and Photovoltaic methods capture 5 to 6 watts per square
> meter. There is no economy of size in either technology. Dividing
> the watts you need by those values gives the land area in square
> meters needed to produce the juice. The numbers are astronomical
>
>
> www.topix.net/forum/so...
>
>
> www.nafa.org/Template....
>
> Gasoline Gallon Equivalent (seekingalpha.com/symbo...) Table
>
>
> Fuel TypeUnit of Measure BTUs Per Unit Gallon Equivalent
>
> Gasoline, regular unleaded, (typical) gallon 114,100 1.00 gallon
>
>
> Gasoline, RFG, (10% MBTE) gallon 112,000 1.02 gallons
>
> Diesel, (typical) gallon 129,800 0.88 gallons
>
> Liquid natural gas (seekingalpha.com/symbo...), (typical)
> gallon 75,000 1.52 gallons
>
> Compressed natural gas (seekingalpha.com/symbo...), (typical)
> cubic foot 900
> 126.67 cu. ft.
>
> Liquefied petroleum gas (LPG or propane) gallon
> 84,300 1.35 gallons
>
> Methanol (M-100) gallon 56,800 2.01 gallons
>
> Methanol (M-85) gallon 65,400 1.74 gallons
>
> Ethanol (M-100) gallon 76,100 1.50 gallons
>
> Ethanol (E-85) gallon 81,800 1.40 gallons
>
> Bio Diesel (B-20) gallon 129,500 0.88 gallons
>
> Electricity kilowatt hour 3,400 33.53 kwhrs
>
> Mr Peterson may have a point.
>
> The Plug In Vehicle Scam comment.
>
> Listen up America – It's a scam! The emperor has no clothes! There
> is no such thing as a cost-effective electric vehicle that will carry
> a family of four at highway speeds. But the cautionary if not downright
> conservative analysis from sources as diverse and credible as the
> Department of Energy, the White House and Carnegie Mellon University
> somehow manages to get lost in a media sideshow that focuses on scientific
> breakthroughs that promise a 5-minute recharge time for batteries
> nobody can afford to buy.
>
> seekingalpha.com/artic...
>
>
> Let's all try to figure out what is going on.
>
> Mr Peterson may be right. A scam?
>
>
>

May 18 09:56 AM

[Danny Newton:]

The middle states in America have a problem with both solar and wind in that the winter is poor for solar because of cloud cover and the summer is poor for wind because of low speeds. Most of the time, wind or solar makes sense when low power is required and there is huge construction costs to get to the location where the power is required.
Making every state provide the same fraction of renewable energy with solar or wind power will work a hardship on people living in Ohio, Kentucky, Tennessee and Alabama for sure.

May 18 12:30 PM

[bobbobwhite:]

And I thought huge old auto salvage yards in rural south and midwest forests were the ugliest insult man could do to adjacent beautiful nature. I was wrong, as for little electricity gain, we have strewn and are strewing global rural land with the ugliest contraptions known to man outside of oil refineries.....wind and solar generating equipment. Positives....they do produce variable amounts of mostly daytime energy; no way to store it. Negatives........extre... low energy production for the land space/area required, flying bird killers in the extreme, uglier than sin, snake oil in a different package.

Where this junk ever got signicicant backing I will never deduce; it is obviously another bubble that will have to run its damaging course until better minds prevail over this thoughtless and careless speculation by scammers.

May 18 01:47 PM

[Wisdom vs. ...:]

bobbowhite, i hate subsidies, and agree with you they are scams in the long run. but you should know, wind is generating at about $0.07/kWh NOT including subsidies (including downtime) and GE's new 2.5gW generators will lower that more.

each building kills far more birds than each wind generator; at altamont, 0.19 birds per turbine per year were killed, that arguement is california-stupid (enthusiastically ignorant).

i appreciate your intelligent attack on subsidies, but i find the windmills-are-ugly comments just silly

May 18 04:12 PM

[Dan Powers:]

Peter Lynch says that the 72% recent gain in unsustainable. In light of the 80% drop solar stocks took up until March, I'd argue that they're just correcting an over correction. Still down 69% off the bubble high.

May 18 08:52 PM

[orangutan:]

Been to NY or LA lately? Most of those vehicles are not going highway speeds, and they are not carrying a family of four.


On May 17 09:59 PM billp37 wrote:

> Mr Konrad
>
> Please try to resolve solar/wind electric energy output with BTU
> input.
>
> fast neutron
> Santa Fe, NM
> January 12, 2009
>
> From actual experience, wind farms produce 1.2 watts per square meter.
> Solar Thermal and Photovoltaic methods capture 5 to 6 watts per square
> meter. There is no economy of size in either technology. Dividing
> the watts you need by those values gives the land area in square
> meters needed to produce the juice. The numbers are astronomical
>
>
> www.topix.net/forum/so...
>
>
> www.nafa.org/Template....
>
> Gasoline Gallon Equivalent (seekingalpha.com/symbo...) Table
>
>
> Fuel TypeUnit of Measure BTUs Per Unit Gallon Equivalent
>
> Gasoline, regular unleaded, (typical) gallon 114,100 1.00 gallon
>
>
> Gasoline, RFG, (10% MBTE) gallon 112,000 1.02 gallons
>
> Diesel, (typical) gallon 129,800 0.88 gallons
>
> Liquid natural gas (seekingalpha.com/symbo...), (typical)
> gallon 75,000 1.52 gallons
>
> Compressed natural gas (seekingalpha.com/symbo...), (typical)
> cubic foot 900
> 126.67 cu. ft.
>
> Liquefied petroleum gas (LPG or propane) gallon
> 84,300 1.35 gallons
>
> Methanol (M-100) gallon 56,800 2.01 gallons
>
> Methanol (M-85) gallon 65,400 1.74 gallons
>
> Ethanol (M-100) gallon 76,100 1.50 gallons
>
> Ethanol (E-85) gallon 81,800 1.40 gallons
>
> Bio Diesel (B-20) gallon 129,500 0.88 gallons
>
> Electricity kilowatt hour 3,400 33.53 kwhrs
>
> Mr Peterson may have a point.
>
> The Plug In Vehicle Scam comment.
>
> Listen up America – It's a scam! The emperor has no clothes! There
> is no such thing as a cost-effective electric vehicle that will carry
> a family of four at highway speeds. But the cautionary if not downright
> conservative analysis from sources as diverse and credible as the
> Department of Energy, the White House and Carnegie Mellon University
> somehow manages to get lost in a media sideshow that focuses on scientific
> breakthroughs that promise a 5-minute recharge time for batteries
> nobody can afford to buy.
>
> seekingalpha.com/artic...
>
>
> Let's all try to figure out what is going on.
>
> Mr Peterson may be right. A scam?
>
>
>

May 18 10:20 PM

[aarc:]

Scam or not, it only underscores the fact that the US consumes more energy than any other country on the planet with no self-sufficient source for that energy and hence no long-term viability that the current consumption rate can be sustained at reasonable costs.

As far as traditional machines and equipment are concerned; engineers had been trying to squeeze out as much efficiency as they can out of mechanical and electrical machines/equipment for decades on ends. Not much can be squeezed out of them with existing "old" technologies.

Electronic and semi-conductor devices are still the "unproven" source of further improving energy generation and usage. Unproven until something comes out of current efforts to re-direct electronics' applications to energy generation and/or usage. They may or may not have long-term viability. Or rather we might say they are still a young industry and still have a long future ahead.

Give it a chance. No other technology exists americans are willing to implement outside of oil and it's derivatives at the present. Nuclear energy perhaps 10, 20 years later when the going gets too tough to bear?

It is understandable that China has plunge ahead on solar energy since oil is a very expensive item for them even at current prices. They also possess the majority of raw material sources for manufacturing the solar panels.

This is a major drawback to current efforts in the US with existing solar panel technologies. The chinese have a head start beyond the US can surpass and may as well result with the US doing more of the importing rather than the exporting side due to the limited source of raw materials for long-term viability.

The US has to invent something else it can have a superior advantage outside existing solar panel technologies. It cannot be done if the government downplays the solar energy sector.

May 19 12:13 PM

[solarguy1:]

Renewable energy tech installers already booming from stimulus funds
One segment of the high-tech economy is seeing a ray of sunshine in the $288 billion of planned tax-relief stimulus. Companies that install solar panels and other green energy equipment are seeing a dramatic increase in orders, as businesses and homeowners take advantage of improved federal tax credits.

The stimulus bill is making tax credits for renewable energy installations available as a check in hand, in the form of a grant for 30 percent of each project’s cost.

“We’re on track to do double the business in 2009 that we did in 2008,”

LON:TSX LSCPF:PINK
acroenergy.com

May 19 02:34 PM

[Tom Konrad:]

The commenter has good data but draws the wrong conculsion. Renewable energy sources will never acheive the energy density of fossil fuels. The problem is that fossil fuels are limited in supply and are causing global warming.

We can't continue with our current lifestyle. Renewable energy will never be equal to fossil fuels, but fossil fuels are also becoming a shadow of their old selves.

An electric car will never be "affordable" if that means matching the economics of a galsoine car with $2 gas... but neither will a gasoline car when gas cost $4, $6, or $10 a gallon.


On May 17 09:59 PM billp37 wrote:

> Mr Konrad
>
> Please try to resolve solar/wind electric energy output with BTU
> input.
>
> fast neutron
> Santa Fe, NM
> January 12, 2009
>
> From actual experience, wind farms produce 1.2 watts per square meter.
> Solar Thermal and Photovoltaic methods capture 5 to 6 watts per square
> meter. There is no economy of size in either technology. Dividing
> the watts you need by those values gives the land area in square
> meters needed to produce the juice. The numbers are astronomical
>
>
> www.topix.net/forum/so...
>
>
> www.nafa.org/Template....
>
> Gasoline Gallon Equivalent (seekingalpha.com/symbo...) Table
>
>
> Fuel TypeUnit of Measure BTUs Per Unit Gallon Equivalent
>
> Gasoline, regular unleaded, (typical) gallon 114,100 1.00 gallon
>
>
> Gasoline, RFG, (10% MBTE) gallon 112,000 1.02 gallons
>
> Diesel, (typical) gallon 129,800 0.88 gallons
>
> Liquid natural gas (seekingalpha.com/symbo...), (typical)
> gallon 75,000 1.52 gallons
>
> Compressed natural gas (seekingalpha.com/symbo...), (typical)
> cubic foot 900
> 126.67 cu. ft.
>
> Liquefied petroleum gas (LPG or propane) gallon
> 84,300 1.35 gallons
>
> Methanol (M-100) gallon 56,800 2.01 gallons
>
> Methanol (M-85) gallon 65,400 1.74 gallons
>
> Ethanol (M-100) gallon 76,100 1.50 gallons
>
> Ethanol (E-85) gallon 81,800 1.40 gallons
>
> Bio Diesel (B-20) gallon 129,500 0.88 gallons
>
> Electricity kilowatt hour 3,400 33.53 kwhrs
>
> Mr Peterson may have a point.
>
> The Plug In Vehicle Scam comment.
>
> Listen up America – It's a scam! The emperor has no clothes! There
> is no such thing as a cost-effective electric vehicle that will carry
> a family of four at highway speeds. But the cautionary if not downright
> conservative analysis from sources as diverse and credible as the
> Department of Energy, the White House and Carnegie Mellon University
> somehow manages to get lost in a media sideshow that focuses on scientific
> breakthroughs that promise a 5-minute recharge time for batteries
> nobody can afford to buy.
>
> seekingalpha.com/artic...
>
>
> Let's all try to figure out what is going on.
>
> Mr Peterson may be right. A scam?
>
>
>

May 22 10:20 PM