Solar ETFs Will Follow the Sun

Includes: CSIQ, KWT, LDK, TAN
by: Tom Lydon

The surge in alternative energy interest has shed some light on two solar stocks, both of which are assets in solar ETFs.

LDK Solar (LDK) gave quarterly results that were so hot, they burned analysts’ low expectations. A sequential leap of 50% in wafer capacity by the quarters’ end gave way to an 89% rise in sales for the period. LDK also raised its annual revenue estimates by a big 50%, reports Kirk Shinkle for U.S. News & World Report.

The company also signed a five-year, 300 megawatt supply contract with India’s XL Telecom & Energy, beginning in the first quarter of 2009, reports Matt Daily for Reuters.

Canadian Solar (CSIQ) has been gaining interest with modules that use low-cost alternative material from Timminco. LDK is rumored to be a possible buyer of the latest silicon, used to make solar cells. Canadian Solar, Q-Cells and CaliSolar are already purchasers of the silicon, report Jennifer Kho and Ucilia Wang for Greentech Media.

With oil prices being what they are, the solar energy industry is seeing growth in the range of 30%-50% a year, says Beacon Equity.

That growth could be spurred on by efforts some big-box retailers are making to take advantage of their gargantuan size. Many of the nation’s biggest retailers - think Wal-Mart (NYSE:WMT), Kohl’s (NYSE:KSS), Safeway (NYSE:SWY) - have installed solar panels on their roofs to generate electricity, reports Stephanie Rosenbloom for the New York Times. It’s not a 100% altruistic move, though: they’re racing to beat a Dec. 31 deadline for tax advantages these products bring.

Depending on the location and weather, solar panels can generate 10%-40% of the power a store needs.

Still, whatever the reason, these moves could not only give the environment an assist, but it could benefit the solar industry, as well.

ETFs holding these solar companies:

  • Claymore/Mac Global Solar Energy (NYSEARCA:TAN): down 11.3% since April 15 inception; CSIQ is 3.1%; LDK is 5.1%
  • Market Vectors Solar Energy ETF (NYSEARCA:KWT): down 14.6% since April 23 inception; LDK is 4%