Solar Rises 10.8%, Renewable Elec & Biofuels Up Also (Week Ending 5/16)

Author: Mark Henwood

Broad market indices (Emerging Markets, EAFA, S&P500) all rose significantly this week. Camino’s PurePlay™ indices, with the exception of Fuel Cells, were up. Commodities (DJP) retreated slightly.

Solar was the story of the week with our 34 member index increasing 10.8%. Six constituents rose more than 20% with the top three, SolarFun Power (SOLF), Renesola (SOL), and China Sunergy (CSUN) increasing more than 40%. Renesola reported strong Q1 results on the 14th. SolarFun and China Sunergy are scheduled to report earnings next week.

Even after its 53.85 % price increase last week, SolarFun’s current year PE is 4.7 and its 09 PE is 2.8. With continued high growth rates expected, and unless there is a negative surprise next week, I wouldn’t be surprise to see this stock rise further. Renesola’s current year PE is now 22.3, but with expected growth in the 50% range it may support a higher price also.

China Sunergy’s 44.9% increase is harder to understand. The company isn’t profitable this year and has a 09 PE of 32. Offsetting this are consensus expectations of revenue growth of over 50% this year and next.
After last week's big gain at Energy Conversion (ENER) the stock rose an additional 19.2%. I didn’t see any events specifically related to the company that would drive this change. The stock is in both of the solar ETFs, so money flowing into them may have lifted the stock last week. At a current period PE of about 80 I can’t justify owning it.

Biofuels bounced up 4.9% last week. Some of the gain was, no doubt, driven by oil prices but some was driven by the 27.3 % increase in Brasil Ecodiesel (ECOD3.SA). The company reported a significant block transaction of stock during the week. Next week we’ll look at the correlation of this strategy with oil prices.

Fuel Cells continued to suffer with Medis (MDTL) leading the decline. The company reported an increased YoY quarterly loss. This strategy is now down 33% of the year and is still searching for the winning product mix.

LED & Lighting is a new strategy being tracked at Camino. It consists of 9 companies that pass our screens and are producers of energy efficient lighting using LED, fluorescent, or other technologies. We expect this sector to grow as technical improvements and rising retail electric prices make advanced lighting more compelling to customers.

In total our five indices, which track just PurePlay™ sustainable energy companies, have aggregate market capitalization of USD 227 billion.

Editor's Note: Correction to the original version above. SolarFun's current year PE is 32.2 and its 09PE is 19.5.

Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. He also is an investor in sustainable energy stocks.

Comments

[jbde]

SOLF - their listed eps estimates are in Chinese RMB not US dollars. Their 'PE' is thus appears mistated [too low] by a factor of 7.5
Sites like Yahoo Finance etc. do not indicate the currency of the estimates and thus are misleading - they MUST correct this. SOLF is due to earn 15 to 19 cents this quarter tp be reported before the market open on Wed May 21st.

[MakrkHenwood]

User 190552 - Thanks for catching the oversight. I check SOLF's SEC filings and verified that the analysts' estimates are reported in RMB (CNY). Correcting for this and using Friday's values SolarFun's current year PE is 32.2 and its 09PE is 19.5.

[sundance cpv]

Tax credits usa renewable energies *extension* looming around the corner and farm bill, majority in the house will be in favor of kicking oil down and saving the USA economy with thousand and upon thousands *new* job growth taking the economy into high gear.

*only renewable energies are now in the forefront and advanced cpv such as that of EMCORE and SPECTROLAB and other renewable energy products are not only YESTERDAY'S *BABY GORILLAS* BUT SOON TO BE KING KONG AND GIANTS IN THE FOREST.

IF SPECTROLAB AND EMCORE CPV CELLS AND PRODUCTS ARE ALREADY PART OF THE US SPACE TECHNOLOGIES, THE WE ALL SHOULD BE PROUD OF OUR COUNTRY DOING BUSINESS WITH *(MADE IN USA)* NOT MADE IN YOU KNOW WHERE *(?)*.

***BET ON MADE IN USA WITH USA TECHNOLOGIES BY USA LABOR.

***NOT: Borrowed patents from the USA, in some foreign country.