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