The Sharp Edge of Solar: Are Solar Stocks Cheap?

Who do you think is the world leader in solar energy installations and in raising the bar when it comes to being competitive? Would you guess First Solar (Nasdaq:FSLR) or perhaps Suntech Power (NYSE:STP)?

I guessed wrong myself, and I found that the answer is Sharp (SHCAY.PK) Solar. Like you, I didn't realize how committed they are to being the world leader in solar energy solutions.

How do I know that Sharp is so committed to putting renewable energy solutions, such as solar energy, anywhere and everywhere? Because they say so emphatically. Check out Sharp's vision of a solar powered world in this video: http://sharp.smnr.us/#multimedia

Sharp Solar's vision for a clean, solar-powered world started with their solar cells in a lighthouse over 40 years ago. From wineries to solar-powered space satellites, this innovative company is the leader in providing solar-powered energy around the world.

Their motto is, "Change Your Power, Change Your Planet" and they sound like they are determined to back up those words with solar-energy products that will continue to be the industry standard for some time to come.

"Sharp Solar Systems:The Economical and Ecological Choice" says their web site at http://solar.sharpusa.com/solar/home/0,2462,,00.html . This is what they claim about their residential solar systems:

"Sharp residential solar systems give families the ability to generate their own electricity from the inexhaustible energy of the sun - with no harmful emissions.

They're cost-effective, quiet, attractive, safe, and reliable, with only minimal maintenance required over their long operational life. They're the right choice for your home and the right choice for the environment. It's no wonder why so many homeowners are making the move to Sharp Solar."

From an investor's perspective, the trouble with Sharp is that they are difficult to invest in, if not impossible for many.

No wonder many are turning to ETFs like Claymore/MAC Global Solar Energy (NYSE:TAN), whose largest holding (almost 10%) is none other than First Solar Energy (Nasdaq:FSLR).

It also contains some other well-known companies like LDK Solar (NYSE:LDK), Suntech Power (NYSE:STP) and Sunpower (Nasdaq:SPWR). TAN would be a more careful way to enter the world of solar energy investing.

But are the solar energy stocks a good value at these prices? It is a hard question to answer (FSLR sells at a PE ratio of 93). Reuters recently explored this question in an article we would highly recommend. You can find it at the link below:

www.reuters.com/article/marketsNews/idINN1436828220080814?rpc=44

Before you buy any solar energy stock or fund, read this article carefully, thoughtfully, and also do a great deal of "due diligence" to try to determine the risk-versus-the-reward of it all.

For those interested in TAN, take a gander at the 6 month chart below, which you might find instructive.

click to enlarge

All I can say about solar energy stocks right now is, "Buyer beware!"

Disclosure: None

Comments

[tilut:]

Acording to me, US solars are not cheap ,the most obvious example is FSLR. However, most chinese solars are undervalued if you look at their PE and PEG ,I would say seriously cheap .

2008 Aug 15 07:40 AM

[ArmSte:]

Why is it difficult to invest in Sharp? Here in Germany I can buy them as easy as domestic stocks - and so I did recently.

Armin

2008 Aug 15 08:01 AM

[Wayfarer:]

Yes, I was aware Sharp was a big solar player but like GE they are so diversified you can't make a targeted play. For instance, they make wonderfully dependable cheap microwaves.

Off subject but SPWR up about 17% this morning on a 250meg sale to PG&E. This also includes their two direction tracking system. Optisolar, startup thinfilm, got 500megs too but theirs is just rack mounted. I found it real interesting that Optisolar has the manufacturing capacity to quickly produce 500meg. They use a amorphous silicon which is not toxic like FSLR's cadTe. Might be time to start shorting FSLR

Thanks for your post,

Way

2008 Aug 15 11:13 AM

[burton:]

LDK P/E is now around 15, and FP/E around 5. The growth of that company is incredible, and investors are starting to notice it, so price has been going up steadily, even though more than half of the float shares are short. A huge short squeeze is expected.

2008 Aug 15 11:21 AM

[Marc Courtenay:]

Great comments and thank you. Right now Sharp is hard to buy in the US because it only sells on the pink sheets via OTC. Average volume on the pink sheet ADR is only around 83,000 shares per day.

2008 Aug 15 03:11 PM

[stockfan1:]

CSIQ is the cheapest of the lot P/E of only 9. It has contracts spread all over, and vertically intergrated and it has UMG, and CSIQ could earn $7 in 2009. CSIQ has an excellent management and is very well run

2008 Aug 15 05:25 PM

[FWallace:]

SATC.... has great potential....

2008 Aug 15 09:39 PM

[DarkStealth:]

Solar is really simple once you understand it. First Solar has the cheapest panels & best balance sheet. SunPower has the best technology & the best business with utilities for the incredibly large scale (well, we should look at this newcomer OptiSolar, who I've never heard of until they announced their incredibly large deal (550MW!) in California). I'm not convinced the other solar companies will be around after a few years.

Isn't Sharp anything but a pure play? If you want to buy a company that mixes solar with some chip-making exposure, buy Cypress Semiconductor (who owns ~half of SunPower).

2008 Aug 16 06:01 AM

[Ray The Mon...:]

Oil is up today and the sun is shining bright on our solar stocks. Short FSLR? No, but maybe short PV.


thealternativeenergyin...

2008 Aug 21 07:38 PM