Solar Gets What They Want, But Stocks Still Suffer

What a difference two hours makes. The end-of-the-day stock market sell off that started with the House passage of the financial bailout bill sucked the solar stocks sharply lower. While the stocks had been trading higher earlier in the session, as some investors celebrated the inclusion in the bailout bill of an 8-year extension for solar investment tax credits, the shares then headed south in a hurry. First Solar (FSLR), for instance, dropped from $183 and change right after the vote to about $160, a drop of $23, or about 13%. In two hours.

Immediately after the vote, the list of stocks looked like this:

• First Solar (FSLR) is up $5.40, or 3%, to $183.26.
• Evergreen Solar (ESLR) is up 28 cents, or 5.5%, to $5.33.
• Suntech (STP) is up $2.68, or 8.8%, to $33.22.
• SunPower (SPWR) is up $1.67, or 2.3%, to $73.
• MEMC (WFR) is up $1.35, or 5.4%, to $26.16.
• Solarfun (SOLF) is up 30 cents, or 2.9%, to $10.72.
• Canadian Solar (CSIQ) is up 56 cents, or 3.4%, to $17.
• LDK (LDK) is up $1.23, or 4.2%, to $30.54.
• Energy Conversion Devices (ENER) is up $5.80, or 10.2%, to $62.86.
• JA Solar (JASO) is up 65 cents, or 6.5%, to $10.73.

But now most of those stocks are down. Here’s the same list, with updated prices at close:

• First Solar (FSLR) is off $14.67, or 8.25%, to $163.19.
• Evergreen Solar (ESLR) is off 12 cents, or 2.4%, to $4.93.
• Suntech (STP) is up $2.93, or 9.6%, to $33.47.
• SunPower (SPWR) is off $3.67, or 5.2%, to $67.66.
• MEMC (WFR) is up 56 cents, or 2.3%, to $25.37.
• Solarfun (SOLF) is off 6 cents, or 0.6%, to $10.36.
• Canadian Solar (CSIQ) is off $1.26, or 7.7%, to $15.18.
• LDK (LDK) is off $1.14, or 3.9%, to $28.17.
• Energy Conversion Devices (ENER) is off 80 cents, or 1.4%, to $5626.
• JA Solar (JASO) is off 54 cents, or 9.4%, to $9.54.

Comments

[User 226214:]

CSIQ is definitely a strong buy here, they just confirm their 2009 outlook and UMG product is cheap enough and not anyone can compete with them in price even thin film. The material is 70 ton compare to silicon of 400 per ton.

2008 Oct 04 05:48 PM

[petyaczar:]

IMO

Once the dust clears on the misnamed "bailout bill" and word gets out
on the renewal of the solar tax incentives then solar will rise again.

Subject of course to what happens to the irratic and illiquid and fearful financial industry - with no small thanks to "MArk to Market" and Sarbanes/Oaxley and the politicians who created this mess by foisting "Mark to Market" upon us along with the requirement for social engineering in lending thru forcing -under penalty of criminal prosecution - social engineering and requiring all lenders make loans to unqualified borrowers, especially minorities, in the name of "Social justice.

With special notice of disdain and dishonor on the major proponents bubba bill clinton, janet reno, paul sarbanes, oaxley,barney frank,al schumer, Chris Dodd, joe biden, hillary clinton, and of course frank raines of fannue mae and his major crony buddy Barak Hussein Obama, a supporter of the radical odmestic terrorist group ACORN and major recipient of politcal donations from Fannie Mae and his buddy frank raines..

The politicians caused this fiasco, not Wall Street. A Pox on both your houses.

IMO

2008 Oct 05 10:08 AM

[NOWHEREMAN:]

You do know that CSIQ is a Chinese company that is just incorporated in Canada?

Other than that, if it can just get by a couple of more months without penetrating below say 14, you should have a double here vs say FSLR which is still vastly overvalued. The difference is a low PE vs a High PE.

In the Internet Bubble, all they had was Promise. Promises do not buy a cup of coffee now.

2008 Oct 05 10:25 AM

[NOWHEREMAN:]

A report on the ups and downs of the Solar Sector during fridays' spectacular "sell on the News" can be retrieved by anyone willing to look at an intraday chart.

You pushed these same stocks pre-market on Friday, most following your advice would have been whipsawed.

So, did you follow your own advice or did you have positions going into Friday's debacle that were undisclosed???

2008 Oct 05 10:35 AM

[jmmx:]

Welcome to the REPUBLICAN RECESSION!

A retreating tide lowers all boats. If people are leaving the stock market, then there is no money even for good investments. Why? Because people see a big recession coming and eventually even fantastic companies such as Apple will lower sales. So everyone is running.

The Republicans bowed down and worshiped to the altar of deregulation and this is what we get. Just like the S&L and Junk Bond bailouts 25 years ago.

Palin said "GREED on Wall Street..." Like DUH!!! What do you think Wall Street is about?? That is why you do not give them free rein to go and do anything without guidelines. That is anarchy - as we have learned too late. You gave a drunk teenager the keys to a mazaratti and he drove it off a cliff.

This REPUBLICAN administration has more than doubled the DEFICIT has sold us out to China and Saudi Arabia. This is and the are the reasons we are in such a mess. Of course the stupid unnecessary war that has cost us almost a trillion dollars is a big part of it.

Deficit UP => Dollar DOWN => Oil UP => Stagflation! - It is that simple. Unfortunately, the republicans are are also too simple to see this.

2008 Oct 05 11:25 AM

[gebby:]

jmmx good call, you see this debacle as is. meanwhile we need journalist to tel the story as opposed to stating the obvious. does savitz think these stocks should be bought now that the itc has been passed. the delay in passing the investment tax credit was the reason for selling. now if solars cant survive starbucks is going out of business.

2008 Oct 05 11:56 AM

[searcher:]

Hopefully, none of the sages posting here hold the delusion that the market validates ideology or hagiology. Otherwise, any investment horizon of significant duration will be very painful.

2008 Oct 05 11:57 AM

[jmmx:]

@ searcher

The market validates only that investors are losing confidence in the ability of corporations to generate profits.

The conclusion I draw is that this is a result of the various aspects of the economy, in particular the aspects I mentioned. I assume a quasi-causal relationship here. I think that few people would argue that we would not be in this mess - or at least not so deep in it - if there had been reasonable regulations that prevented the making and selling of these "toxic" loans. Let's face it - these loans were totally absurd and many people knew it. (Of course we still would have been on shaky ground due to the deficit).

As for you comment: "... delusion that the market validates ideology or hagiology." With me, instead of "hagiology" you might want to use DEMONOLOGY. ;-)


This is a very good exploration of what happened:
audio.thisamericanlife...

2008 Oct 05 12:20 PM

[Road Runner:]

Another factor in the solar stock drop may be the scramble by hedge funds to liquidate assets to raise cash lost by plummeting commodities and investor withdraws. The hedge funds are taking a beating right now. Their asset liquidation is adding an unpredictable and irrational movement to stocks.

2008 Oct 05 12:36 PM

[ekud:]

It was the dems who refused to regulate the affirmative action loans in the house and senate


On Oct 05 11:25 AM jmmx wrote:

> Welcome to the REPUBLICAN RECESSION!
>
> A retreating tide lowers all boats. If people are leaving the stock
> market, then there is no money even for good investments. Why? Because
> people see a big recession coming and eventually even fantastic
> companies such as Apple will lower sales. So everyone is running.
>
>
> The Republicans bowed down and worshiped to the altar of deregulation
> and this is what we get. Just like the S&L and Junk Bond bailouts
> 25 years ago.
>
> Palin said "GREED on Wall Street..." Like DUH!!! What do you think
> Wall Street is about?? That is why you do not give them free rein
> to go and do anything without guidelines. That is anarchy - as we
> have learned too late. You gave a drunk teenager the keys to a mazaratti
> and he drove it off a cliff.
>
> This REPUBLICAN administration has more than doubled the DEFICIT
> has sold us out to China and Saudi Arabia. This is and the are the
> reasons we are in such a mess. Of course the stupid unnecessary war
> that has cost us almost a trillion dollars is a big part of it.
>
>
> Deficit UP => Dollar DOWN => Oil UP => Stagflation! - It is that
> simple. Unfortunately, the republicans are are also too simple to
> see this.
>

2008 Oct 05 06:12 PM

[PhillyD:]

One thing that was not mentioned in the Republican rebuke was the fact that Democrats for decades have been pressuring banks to make loans to poor people because in their minds the conservative bankers were racist or sexist. Even rap videos 10 years ago featured white bankers in black neighborhoods as the devils.

Now that those bankers made those loans (and way too many more for people with good jobs with no money down - people of all races) we call them greedy?? Banks were given cheap money and 'told' to loan it out. They did what they were told. Now we're paying the price.

2008 Oct 05 09:46 PM

[cliffman:]

Add WWAT and EMKR to your solar company list.

2008 Oct 05 09:55 PM

[NOWHEREMAN:]

The Main Culprits behind the collapse of Fannie and Freddie were Democrats. This is undeniable, their words and deeds are available on video for all to see. Their voting records cannot be hidden.

But laying the Blame on Bush seems to be your only way of keeping their voting records from public view.

Too Bad, the Voting Public is receiving the truth even as I write. 09-45 PM CDT Oct. 05- 2008.

Can't handle the truth, don't bother watching. Others will do it for you.

2008 Oct 05 11:10 PM

[Alphameister:]

The fingerprints of Obama (second only to Dodd as a recipient of campaign contributions from Freddie and Fannie) are all over this affirmative-action housing debacle. Community organizer = radical agitator (see ACORN). McCain co-sponsored legislation to rein in the two GSEs but Dems were solid in their "hear no evil, see no evil, speak no evil" support of F&F. (Not that any of this has relevance to the subject article.)

2008 Oct 06 12:07 AM

[Vox Rationalis:]

This whole mess is the Democrats' fault. Except that this whole mess is the Republicans' fault.

Now can we get back to talking about the markets?

2008 Oct 06 11:53 AM

[Stockguy456:]

In about 2 weeks we will have some great deals. They are already good, but going lower.

2008 Oct 06 01:31 PM

[David White:]

Tuesday: FSLR and SPWR were both downgraded today by GS on fears for the solar industry (I suppose due to a recessionary world economy). This tended to drag all of the solars along with them, although neither LDK or CSIQ were downgraded by GS. LDK has virtually all of its production for 2008 and 2009 already sold at fixed prices. It is also one of the leaders in UMG solar manufacturing. This should help it increase its margins. It can probably only be hurt substantially during the 2008 and 2009 time period by companies which contracted for its product going under (reneging on their contracts). While this could happen, it seems more likley that LDK will continue to do extremely well, even in the short term. CSIQ was named the Bull of the Day today by Zacks. However, it is still down due to the GS rating downgrade on FSLR and SPWR. I am looking for it to recover during the day. It should have a lot of upside potential. It is one of the leaders in UMG polysilicone manufacturing. This should give it a definite edge in margins and business generated going forward. Both of these stocks seem to be underpriced at the moment. They should both have good upside potential.

2008 Oct 07 09:23 AM

[David White:]

I should have noted that FSLR and SPWR were downgraded due to a new forecast for oversupply problems in the solar industry over the next year. The reason cited for the oversupply problems was an expected cut in subsidies. However, the U.S. has just extended its subsidies for many more years. The U.S. has begun to recognize that oil importation costs are toxic for its economy. It is now trying to lessen these negative effects for the future by supporting alternative energy. It seems likely that Japan, and Western Europe will feel the same way. Since these are the countries which are providing the big subsidies, it seems unlikely these most important subsidies will be cut substantially. However, there may still be oversupply problems due to economic issues. These problems may drag down prices. Further the increased competition from UMG solar and CIGS solar as each of these areas grows may drag down prices also. LDK seems best insulated from these effects for the near term (and the long term). CSIQ is one of the leaders in UMG polysilicone solar production. Its margins shoudl grow as a result. This will help dramatically in any price war. Both CSIQ and LDK should have considerable upside from their current prices, which are more a reflection of the current economy than the current expectations of these two companies. When these expectations come back into line, I think you can expect both of these companies' stock prices to explode upward.

2008 Oct 07 09:53 AM

[David White:]

The Fed plan to fund the commercial paper market should help the U.S. economy dramatically. This will augment the $700 billion dollar bailout plan nicely. I am looking for at least a short term move upward as a result. The VIX seems to have momentarily topped out in the 50's. The last time it reached this high was the 9/11 disaster. There is still the possibility of another big downside move in stocks. However, it seems likely that the markets will let the dust settle on the current rescue attempts before they decide to mve down substantially. The Fed and Treasury are making a lot of good moves. It is conceivable that they are orchestrating a market bottom. The SPY has already lost more than 1/3 of its value from its recent top to its recent low. This is already a sizeable bear market. Perhaps we still have more downside coming. Perhaps this seeming near term bottom is the long term bottom. Time will tell. I still think LDK and CSIQ are great buys at their current prices. Both have low PE's for high growth stocks (CSIQ: PE= 10.54, FPE = 3.62, PEG = .18; LDK: PE = 8.98, FPE = 5.10, PEG = .21). Both of these stocks should show substantially lowering of their PE figures in the next reporting period (November). Neither should rationally have much further downside potential in a rational market. Of course, both are owned by mutual funds and hedge funds. if people liquidate their holdings in thes funds, these great performing stocks coudl still go down short term. Still it seems likely they will rise again quickly. Their fundamentals, especially LDK's, with its substantial long term fix rate contracts, will drag them upward in the longer term.

2008 Oct 07 10:15 AM

[David White:]

The prospects of LDK and CSIQ remind me of an old FDR fireside chat adage, "We have nothing to fear but fear itself."

2008 Oct 07 10:17 AM