Solar Stocks Show Signs of Life

Solar stocks capped a fantastic week with every solar stock except one (WFR) clocking a double digit gain. This seems like the best week solar stocks have had this year but are still far off from where they started in 2008.

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The biggies, First Solar (FSLR), Suntech Power (STP) and Sunpower (SPWR), all made impressive comebacks. I am kicking myself for not buying Suntech Power (STP) when it was in the 30's. I was closely watching it and was hoping to enter Suntech in the high 20’s. Well, before I knew it Suntech goes from 30 to 40 in a week.

The question is have the Solar Stocks turned a corner here? I don’t have the answer. Do you? Do you see this as an opportunity for a short-term short, or are you planning to go Long?

Disclosure: No holdings in any of the above mentioned stocks

Comments

[Dr. Duru:]

A good way to answer the question is to juxtapose the news during the week that helped the solar stocks in the face of an otherwise weak stock market. I noted a few, there is likely more:

1. Solarfun's earnings (SOLF) - I consider this company questionable but the market temporarily interepreted the report as a big positive
2. Germany's Solarworld posted great earnings
3. News (rumors) early in the week that the Congress would extend tax credits and subsidies to bolster solar energy (seems that this is still at least a month away or more. I have read concerns that partisan politics could impede progress)
4. Several analyst upgrades and positive commentary on companies such as Jaso, Suntech, and Fisrt Solar
5. California announcing huge solar projects
6. FPL announcing it was getting into the game with a large solar utility project

So, the stars, so to speak, aligned last week to put a lot of momentum behind these stocks. If you believe that the recent news represents incrementally new good news, then you would be right to buy. If you think that this news just adds to the on-going noisy hype, sit tight.

I am personally sitting tight for now because many of the sharts seem over-bought in the short-term and the overall market's weakness is very likely to drag these stocks back down. I also do not like the way most of the solar stocks that reported earnings in the past month or so experienced quick pops that were quickly faded to ever lower prices. Very suspicious behavior for a sector that is supposed to have a lot of future positives.

2008 Mar 30 05:05 PM

[PA:]

its all short covering last week.....will need to see if they hold

2008 Mar 30 05:53 PM

[sonya:]

No doubt solar will soar long term..with economy as it is and where it's likely headed, people will continue to look for a quick buck and ride the solar waves. I think the investors are nervous and sketchy and not the sector. The sector is what it is..the cleanest, most consistently provided source of renewable energy, with the least maintenance required to produce it, the least impact on the environment and food sources-solar will grow by leaps and bounds..long term.

2008 Mar 30 06:03 PM

[Ames Tiedeman:]

Many solar stocks have been crushed. One would think they can bounce here. Ethanol stocks have also been hammered into the ground.

2008 Mar 30 07:04 PM

[User 170287:]

Lazard initiates JA Solar with buy, praises China solar firms
Marketwatch - March 28, 2008 10:57 AM ET


NEW YORK (MarketWatch) -- Lazard Capital Markets on Friday initiated coverage of JA Solar and issued positive comments on ReneSola and Solarfun after recent earnings and manufacturing updates from the trio of China-based solar energy producer

Taking aim at ReneSola Ltd. (SOL), Shrestha said he sees further upside for the solar cell manufacturer, as he lifted its profit margin view and upped his price target to $18 a share from $12 a share.

"We would not be surprised to see the multiple expand as the company continues to execute on its expansion plans and delivers solid financial performance," Shrestha said.

"SOL" has a great future and a $18 target, it is darn cheap and an excellent buying opportunity

2008 Mar 30 07:35 PM

[The Genius:]

I'm long on Candain Solar (CSIQ)

2008 Mar 30 08:43 PM

[Philly Jim:]

Solar companies seem like BS. I'll buy when I can buy their products in Lowes and Home Depot, until then, it all seems like a 70's pipe dream that will never translate into something the general population will use.

2008 Mar 30 10:44 PM

[ValueHunter:]

Too early. These first players will be eaten alive by the second generation players like Nanosolar.

2008 Mar 30 10:53 PM

[RossFerg:]

The entire market is a wave. If you want to make any kind of money in the solar game you need to follow the oil market.

2008 Mar 30 11:29 PM

[User 170287:]

These stocks (SOL, FSLR, JASO,SOL) gave excellent 2 digit returns. I missed the bota for FSLR and JASO.

2008 Mar 31 04:52 AM

[User 170287:]

FSLR and JASO have reached their peaks. Room for SOL has $18 target by Lazard. If I can get in the stock even at $12-14 it is excellent profit, whatever others say.

2008 Mar 31 04:57 AM

[Tim H.:]

Himanshu, I bought STP at the price you are kicking yourself for not buying at: $30.51 on March 19th. I was kicking myself for not buying STP at $35 in August where it ran all way to $90 in january. I like long term view on Solar and to Phlly Jim who thinks Solar is a 70's pipe dream. News last week was Utility company in California is spending almost $900 mil to lease warehouses and put solar panels on them. Leading to cheaper, cleaner power. While it's tempting to take profits on such a runup in short time. I am going to stay long on STP. I am an investor not a trader. I am playing with house money at $30.50. Stop in at minus 10%.

2008 Mar 31 06:59 AM

[CliffA42:]

Sold a third of my long position on YGE; think it's got potential for mid-20s. Traded out CY (which rides on SPWR), then picked it up again. Bid for STP missed in the low-30s, quel dommage! But think it can be picked up again in mid-to-upper 30s. Don't understand the beating WFR has taken while the rest of them were on the rise. For the time being, the solar space is a trader's market. For the long term, it ain't a fad. When the storage problem is solved (check out MXWL on that one), you will be able to buy a home installation system at Home Depot. That day is not far off.

2008 Mar 31 08:22 AM

[supershort:]

These companies are trading at a tremendous multiple. SPWR over 600x earnings and they warned at last earnings. I think solar will do well in the future but at reasonable multiples. I am short any company with over 50 times earnings in a bear market which we are in. BGG, SPWR, ALGN, STP, AMT, MTN, SUP are my favorites for now.

2008 Mar 31 09:17 AM

[gebby:]

long and staying long, trade the solars from the short side? that was yesterday look to the future. this week al gore is starting a 300,000,000 dollar ad campaign to increase awareness of global warming. it is real . the greater risk is not owning these stocks. risk here: 10 15 points down 20-100 points up over next couple of years.

2008 Mar 31 09:31 AM

[gebby:]

the multiples of these stocks are NOT high. despite supershot. he is a bear

2008 Mar 31 09:32 AM

[dicki31785:]

first of all those are trailing PE's supershot and if you look at the growth rates of these firms you will realize that those numbers are absolutly irrelevant....and @Phily Jim....just because in america you rather subsidize oil and gas firms for some reason doesnt mean their is not a market out their(just that market is not in america, so far, rather than that in spain, germany, and soon italy will boom too so take a look at spwr which positioned itself very well in italy as well due to a takeover of an italian firm)....and maybe it is wiser to subsidze alternative energies rather than to start a war for energy resources in other countries....saves a lot of money and more importantly lives...with kind regards from Germany

Disclosure: Long SPWR, CSIQ, and STP

2008 Mar 31 09:53 AM

[User 170287:]

"SOL" entry point now. Target $18 by Lazzard

2008 Mar 31 10:00 AM

[gebby:]

As further proof of the viability of solar's business model, there are big tech companies that have offer exposure to solar, such as Applied Materials (AMAT). The company recently announced that it had signed a $1.9 billion deal to supply and install equipment for "multiple solar factories" for a private company based outside of the United States.

Notwithstanding the recent pullback in stock prices, solar does indeed have a sunny future. Solar is still very early in its growth stage, and solar companies, particularly the producers of solar silicon and integrated modules, will experience more volatility as they navigate roadblocks such as supply constraints and market demand. Most of today's existing solar technologies are becoming more efficient and more affordable, and emerging technologies and manufacturing methods promise to keep the sector going strong. Even though solar stocks have taken a serious hit, that isn't a sufficient reason to sour on the long-term potential of the sector.

2008 Mar 31 11:37 AM

[gebby:]

a 70's pipe dream? India unveils more incentives for solar power - EE Times

EE Times reports India's renewable energy ministry has announced a new program designed to expand solar power generating projects up to a maximum capacity of 50 megawatts. Solar developers who build, own and operate projects will be supported with financial incentives of about 30 cents for each kilowatt of solar power generated per hour. Incentives for thermal power fed to power grids would be slightly less, according to a govt statement. Faced with inadequate power generation and big transmission and distribution losses, the Indian govt wants to generate at least 10% of its electricity through solar power by 2012. A total of 33 solar photovoltaic power plants connected to the Indian power grid have already been built with govt support. The plants are expected to generate 2.55 mln units of electricity annually.

2008 Mar 31 01:03 PM

[frflyer:]

Solar bears or skeptics like Philly Jim have been fooled like a lot of Americans by the mountain of dis-information coming from those whose interests are threatened by alternative energy.
And example is a talking head on FOX news a few months ago, who said solar couldn't propel a small sailboat, never mind contribute meaningfully to America's energy needs. Of course no one at FOX challenged this statement.
Not supprising since FOX is one of the major disseminators of dis-information.

from Green Wombat
"Abu Dhabi is not content to just sell you the oil that
fuels your SUV; now its going to sell you sunshine to
keep your lights on and power your electric car
when the internal combustion engine goes the way of
the buggy whip. Masdar, the oil-rich emirate’s $15
billion renewable energy venture, and Spanish
technology company Sener on Wednesday announced
a joint venture called Torresol Energy to build large-
scale solar power plants in Australia, Europe, the
Middle East, North Africa and the United States."

"The irony is too rich to leave unsaid: A leading oil
producer invests billions in carbon-free energy while
a leading consumer of fossil fuels - the United States
- continues to subsidize Big Oil while while offering
only tepid support for green technology."

Maybe Americans will wake up soon enough to see the oppurtunities they are throwing away, along with their money wasted on the $800 billion annual hidden costs from oil, and the $80 billion annualy given to oil comanies.

That's the other part of the propaganda, pretending that alternative energy will need too much in the way of subsidies, which are miniscule compared with the subsidies for oil, gas, coal and nukes.

Sources.
www.setamericafree.org...
www.monitor.net/monito...
www.progress.org/2003/...
www.eoearth.org/articl...

2008 Mar 31 01:15 PM

[svosavvy:]

America doesn't need to wake up for solar to be good, the rest of the world is going to take us to the woodshed on this one (just look at the socialistas in spain). Just look at Brazil now whos laughing in the game of energy independance. These companies represent the next generation, panels aren't so ugly anymore just look at the BIPV (building integrated photovoltaic) this is not your fathers solar panel. Some of the offerings from STP look like actual skyscraper windows and are actual roofing grade material, not some hunk of junk sitting on top of the roof. Hey, by all means keep playing negative sentiment then I can get more on the cheap.

2008 Mar 31 01:55 PM

[supershort:]

SPWR has not reported any insider activity through the SEC in the past year. It may have reported transaction activity through other regulatory bodies. As a result, the activity below may not reflect the complete activity by the company's insiders.


Monthly Share Rotation Number of Shares Value of Change Percent of Shares Outstanding
Buyers 3/29/08 60,850 $3,999,062 0.80%
Sellers 3/29/08 1,973,109 $129,676,678 3.00%

You guys really need to wake up. There are many "good clean in favor" companies out there. I am not a bear because I don't believe global warming is real. It is real, but we may not have a choice anyway. The earthg was probably meant to be warmer anyway. Look at the prehistoric times. Just because as meteor hit the earth and caused the ice age, we have been getting warmer since. No new news.

I would purchase solar panels if they were right for me, and all should do the same. But if you are an investor or trader, these are totally crap fundamentally. Look at MSFT, IBM, EBAY, GOOG any company that made it. There were massive insider buying, NOT SELLING. I am following the lead of the insiders and institutions which clearly is to sell.

2008 Mar 31 02:39 PM

[dicki31785:]

These guys get paid mostly in shares.....you should also take that into account

2008 Mar 31 03:00 PM

[User 170287:]

Get "SOL" before it shoots up higher and higher

2008 Mar 31 03:29 PM

[supershort:]

Institutions also? They are selling also. They are all cutting their positions because the massive residential buildout will not occur this time also. Maybe if they were 7 years earlier during the housing boom, good ecomomy and cheap money. Now the only thing we have is cheap money, but the bank won't give you a loan for such a big ticket, speculative item for your home.

As far as these going to Home Depot. Never until the prices come down alot. They won't for some time as these companies want to bleed the governments first.

SOL is a China stock. I am a free market kind of guy. No company that is owned by a government will be longf in my portfolio, especially a communist one. Isn't that the biggest oxymoron out there, China stocks. They beat up on Monks, subjugate their people, violate all child labor laws out there, pollute like there is no tommorrow. Yep, sure give me a few thousand shares.

2008 Mar 31 03:56 PM

[User 170287:]

I understand but will you pay the bills

2008 Mar 31 04:05 PM

[User 170287:]

GO "SOL"

2008 Mar 31 05:55 PM

[kkin365:]

What happened to LDK? And TSL? For supershort, I wish him/her well -- and wish to suggest him/her to a front-page article in today's New York Times, on Chinese nationals' attitude in the incidents to which he/she referred.

2008 Mar 31 10:17 PM

[windinmyface2:]

At the present, I'm getting burned on SOLF. I bought it at $25.35 with talk of as much as $80.00. It hit $40.00 in January, then the bottom dropped out, so I will wait, and hope to break even.

2008 Apr 01 01:22 AM

[windinmyface2:]

No more Solar for me.

2008 Apr 01 01:23 AM

[cswalker21:]

Anyone know if all the companies on that chart are in PV solar? Are there any Thermo-solar pure plays out there? I think Thermo-solar is where the future is, since that is more economical for large-scale grid-connected implementations.

2008 Apr 01 06:09 PM

[action jackson:]

MEMC (WFR) likely did not experience the recent surge that the other solar companies did becuase it wasn't as heavily shorted. For those of you too jittery too play these solar stocks, MEMC is one that offers a more certain investment, less risk. Solar is not their only business, and this company will be around a long time.

2008 Apr 02 02:01 PM

[Ames Tiedeman:]

Action, your MEMC is now down 12% in pre-market.

2008 Apr 03 07:19 AM

[supershort:]

Thanks kkin365. I am still adding puts to my short position. I am fortunate that the stock can still run up a bit more before I start getting a fed or margin call, so for now I am hanging in and looking forward to the next miss of their earnings on April 17th. They missed in January and with the huge jump in jobless claims 407,000, and the retailers going to be hurting, I can't possibly see the retailers going forward with their plans, as was announced by Macy's. They may start to consider closing stores, so why would they invest a tremendous amout of money if they may close/sell stores.
As far as China and the article:www.nytimes.com/2008/0...

Yep, I am eight thousand percent sure they follow standard accepted accounting principles for their government companies. Who are their accountants...Hou, Wi, Foo, Kum & Hasol?

2008 Apr 03 01:09 PM