Some Solar Stocks Becoming Oversold

A few of the solar stocks are beginning to look like they are oversold.

I have listed brief info on a few below:

Solarfun Power (SOLF)

• PEG = 0.61
• FPE = 2.59

Look at that FPE number!

MEMC Electronic Materials (WFR)

• PEG = 0.71
• FPE = 16.32

Many people think this is the best solar due to its long semiconductor experience and great margins -- 30+%. It also makes its own polysilicone.

Suntech Power (STP)

• PEG = 1.28
• FPE = 29.53

JA Solar (JASO)

• PEG = 1.12
• FPE = 27.72

TradingMarket.com was recommending this is a good bounce play yesterday. Also BofA issued a buy on this stock recently, saying that the Photon PV conference in Shenzhen should spark all the solar stocks higher.

LDK Solar (LDK)

• PEG = 0.24
• FPE = 20.59

FPE will go to 6-10 in February when it begins being calculated based on 2009 earnings.

It has also sold it production for all of 2008 and 90% of 2009. It should be relatively unaffected by any recession in the U.S.

Note: These numbers were from Yahoo Finance yesterday.

Another note: The market seems to be going down, but stocks like LDK, with their future production sold out at guaranteed prices for some time to come, will bounce soon. Stocks like SOLF, with fantastic FPEs, seem likely to bounce too. Keep in mind that much of the worldwide solar market is not in the U.S. The IMF predicted a worldwide growth rate of 4.8% this year -- released last week.

Disclosure: Author holds positions in the above mentioned stocks

Comments

[JLT:]

I believe the numbers you used for your calculations for SOLF were in Chinese RMB currency. Someone at Yahoo is asleep at the wheel. :-O

2008 Jan 17 08:35 AM

[R D Olivaw:]

Good call, and February's year end conference calls and updated FPE's should be interesting. Try
factoring in JASO's projected growth for 2008 and see what that does for its numbers.

Against this is the prospect of NanoSolar's entry to the market, and how quickly they can
produce reliable, highly efficient, solar modules at low cost....

2008 Jan 17 11:34 AM

[David White:]

I think nanosolar will hit FSLR the hardest. Many people will still want to use the higher conversion % solar -- polysilicone. People are not currently factoring in the roof space as a cost for solar. Since the payback is in relatively few years, the loss of "lifetime savings" after the payback period (as energy costs surely escalate) will be an actual cost if you produce less electricity from your roof space (businesses). This means that the 22% conversion rate of polysilicone should still be preferable to a 14% conversion rate for CIGS (nanosolar).

I should mention the LDK just singed a new contract today with neosolar (at fixed prices). This likely means that LDK's 2009 production is now 100% sold out.

2008 Jan 17 01:29 PM

[David White:]

By the way, I would definitely be recommending Nanosolar if it were a publicly traded company. I have seen the expansion plans for Nanosolar, it will take it several years to become a major player in the expanding solar market. There may also be an indium shortage problem in the longer term future for Nanosolar. This may drive their costs up. I am not sure how much.

2008 Jan 17 01:46 PM

[David White:]

So far today my recommendations are holding up. The DJIA is currently down about 160 points. The S&P500 is down about 22 points (like 220 Dow points). Still each of the above stocks are up on the day. Some are only up very slightly.

2008 Jan 17 02:02 PM

[David White:]

With regard to Nanosolar, it may put pressure on other solars. However, it may also light a fire under the home solar market. It may be that virtually all of Nanosolar's output goes to this market, where roof space is not at a premium. Nanosolar's pricing may finally make solar easily within reach (and economically sensible) for a lot of homes. This would also likely increase the growth rate of the solar industry. Cities like San Jose (and the greater Bay Area), L.A., San Diego, Austin, Houston, Dallas / Ft. Worth, etc. might be great places for home solar. It might solve a lot of the power problems in those cities.

2008 Jan 17 03:09 PM

[northland:]

Anyone know anything about TIMMINCO trading on the TSX in Toronto
went from 23 cents to $21 last year and has retreated to about $14 today CN dollars?

2008 Jan 17 04:53 PM

[carlivar:]

silicone is for breast implants.

polySILICON!

2008 Jan 17 05:21 PM

[Harold Kramer:]

Thank you carlivar!
Also this is the second time I've seen that false forward P/E for Solarfun on Seeking Alpha. IF IT'S TOO GOOD TO BE TRUE, CHECK IT OUT FIRST!

2008 Jan 17 05:40 PM

[Harold Kramer:]

Also, MEMC is not a solar company. It is a silicon raw material raw material supplier mainly to the semiconductor industry and also to the solar PV industry.

2008 Jan 17 05:44 PM

[Harold Kramer:]

You know what - Seeking Alpha is starting to remind me of the sub-prime mortgage business. Anyone can post with no Bio required. Inflation of low value opinions is exploding here!!

2008 Jan 17 05:59 PM

[Toto-13:]

Check my analys on my Top-5 fastest growing blog about why the 1300 of SP500 will be a support, and maybe will hold solar.Rob
WallastonInvestments.c...

2008 Jan 18 03:18 AM