Jim Kingsdale wrote an article on Seeking Alpha yesterday entitled "A Case For Retreating From Oil Investments." I wrote the following piece in the Comments section, but have decided to submit it as a complete article as well. I have been bullish on oil and gas for more than a year, beginning well before oil crossed $100, and I remain so today. Although I have been bullish on oil, I never called for oil to hit $150 this year, or, perish the thought, $200.

In an article I published here in early 2008, I said I expected oil to cross $100, cross $110 and test $120, but then spend most of this year between $100 and $120. That remains my prediction. In my predictions, I did miss the irrational rise to almost $150, and perhaps I will be wrong again and oil will go below $100 and stay there for a while.

This past Friday, I wrote an article updating my thoughts on the leading companies in the solar space. Since I submitted the article just an hour after the Trina Solar (TSL) conference call ended, I was unable to comment extensively on information given during the TSL conference call. I am now able to give further thoughts on TSL—which will also help us to understand key facts pertaining to all companies in the solar space.

I found the TSL conference call very interesting—not only because of its relevance to Trina’s prospects, but because I believe the conference calls reinforced many of the themes and arguments I have presented in various articles on these virtual pages over the past several months (I should note that Trader Mark also wrote an article on Trina over the weekend, an article you should also read if interested in TSL).

In early February 2008, I wrote this article giving my thoughts on 11 solar stocks. As you will recall, the stock market was hurting in January, and so were the solar stocks. In that article, I opined that the high-PE stocks in the group - First Solar (FSLR), SunPower (SPWR), and Suntech (STP) - were overpriced, while two were underpriced and screaming “BUY ME.” I further opined that if the market is truly rational, the investment returns on the low-priced stocks would exceed the returns from the high-PE stocks.

In that first article, I submitted a table I had put together, which calculated forward PE’s for 10 stocks in this space. The table is set out again below, with updated data as of yesterday’s close. As you can see, the market has been largely—but not completely—rational.

Folks who have read my articles on this site know that I don’t usually set price targets on stocks that I like. However, the current circumstances pertaining to Penn West (PWE) requires that an exception be made to this rule.

Penn West (PWE) is North America's largest oil and gas royalty trust, and belongs in a group of Canadian companies ("Canroys") that pay a large percentage of their cash flow in the form of dividends to their "shareholders" (who are actually called unitholders). Although various Canroys are active in different businesses, PWE is an upstream oil and gas company with just a little bit more oil operations than gas.I believe that PWE offers compelling value that is largely UNappreciated by investors.

Yesterday, my third article on the solar space appeared on these virtual pages. That article built upon my two previous articles, which offered some forward-looking views on the solar space in general and concluded that Trina Solar (TSL) offered the best risk-reward ratio in this space.

I submitted a table I had put together, which calculated forward PEs for 11 stocks in this space. The table is set out again below (with JA Solar's (JASO) price "% change" corrected after some sharp-eyed contributors found my math error in failing to account for JASO's 3:1 stock split).

Just about three months ago—while the solar stocks were being taken to the backyard and shot—I wrote an article in which I evaluated 11 solar stocks in an effort to determine which one or two I thought offered the best risk-reward ratio. I ended up recommending one stock—Canadian Solar (CSIQ)—which stood out due to a forward (2008) PE of about 11 and a forward Price-to-Sales ratio under unity.

To me, CSIQ stood out not only because of these superior metrics but also because its sales were expected to almost triple between 2007 and 2008 and its earnings were projected to increase 6-fold. I also liked the fact that CSIQ had already contracted most of its polysilicon supply for 2008.

Many SA contributors and authors in the popular press have weighed in on the prospects for solar energy in the next year, the next decade and beyond. Although I have no formal financial training, I have been a student of this space for many years, and in fact, 3 years ago, I installed a large PV system on my house. I also installed a solar-hot-water system at the same time, rendering the house almost carbon neutral in 2005.

More recently, I have been investing substantial dollars in this space, so I have tried to become informed about it. I have written several solar-related articles in SA over the past few months, and between yesterday and tomorrow, I have submitted a series of 3 articles that discuss various aspects of the solar space. In the first article, published yesterday (link), I presented an argument that solar has already achieved grid parity if we make an apples-to–apples comparison with "conventional" power sources. In this article, I discuss my overall thoughts on macro trends in the solar space, and in the third article, to be published tomorrow, I will compare 11 solar stocks and conclude that Trina Solar (TSL) is the best bargain in the group.

I always chuckle when I read an article in the popular press — or a comment on this site — stating something like "Solar is too expensive and will never be a significant source of electric power." Invariably, these articles or comments are never documented to explain how the author reached this faulty opinion.

I believe that I will prove in this article that UNSUBSIDIZED solar is ALREADY at grid parity today against UNSUBSIDIZED "conventional" power sources. The word "parity" implies "equality," and therefore, the only fair comparison is one where ALL costs are taken into account.

Canadian Solar (CSIQ) reported a very nice 4Q '07 Wednesday. Although CSIQ had previously guided to expected 4Q revenues of $110 to $120 million, it actually reported $127.5 million in sales despite having lost about 5 megawatts of production due to the severe weather in China recently. Had that weather impact not occurred, revenues would have been in excess of $140 million, a blowout by any measure, especially considering that 3Q '07 revenues were $97 million and given that 4Q '06 revenues were $24 million.

Here are the sequential revenues for CSIQ's 4 quarters in 2007:

Thornburg Mortgage (TMA) is a major single-family residential mortgage lender (and mortgage REIT) focused principally on prime and super-prime (i.e., high-credit-score) borrowers seeking jumbo and super-jumbo mortgages. Even though TMA has never held a subprime loan (that I know of) in its life, it got taken to the woodshed along with every other lender as a result of the subprime implosion of the last few months. During that time, TMA's stock price cratered from about $30 to about $10.

Things looked up in early Feb, 2008, when TMA reported a profit of 33 cents a share (Wow! A residential lender that's profitable?!) and in reading between the lines, one got the idea that subsequent quarters would be even better. But given the volatility in this space, this good news was not to last.

'Where goeth the price of oil?' is perhaps the most popular topic these days both at cocktail parties and on the business news channels—especially after last week's record run above $101. This makes sense given the fact that just about every American is impacted by the price of oil, one way or another.

Although much ink (a fair bit of it virtual "ink") has been spilt on this topic, the amount of disagreement on this issue remains substantial. Although nobody can predict the price of oil with great certainty, some aspects of the oil market have become clear in the past few months, giving me a fair degree of confidence in what I am about to say here. My goal here is to focus as much on where oil prices WON'T go as on where oil IS likely to be in 6 months, one year and several years down the line.

In a recent article, I compared Canadian Solar (CSIQ) to First Solar (FSLR), Sunpower (SPWR) and Suntech Power (STP). I concluded that among these solars, CSIQ offers a far better risk-reward ratio than the other three stocks. In response to the article, a couple of posters asked if I would expand my comparison to other solar stocks, and I said I would. Here is the outcome of that analysis.

Before presenting the comparison, I want to discuss my assumptions, biases and methodology:

I have a confession to make: I’m not actually going to answer the above question.

But I am going to tell you it will be soon—probably within five years—and probably even sooner in many locations where “conventionally-made” electricity is more expensive than the 10 cents per KWH that is frequently bandied about as total cost for electricity (power production plus transmission and distribution costs). Indeed, in some cases, PV is already at grid parity. For example, a friend who bought a piece of land 1/4 mile from existing power lines is already at grid-parity because his whole solar system—unsubsidized—cost less than the $100,000+ the power company wanted to charge him to extend their power lines to his to-be-built house.

It seems that most stories you read about companies in the solar space focus on First Solar (FSLR), Sunpower (SPWR) or Suntech Power (STP), all of which have PEs in excess of 50. Just like the sexy stocks of the dot-com era, these stocks are touted by some analysts without regard to normal metrics such as price-to-earnings or price-to-sales ratios, and without looking at other companies in the same space that may offer a better risk-reward ratio.

One can never predict the future, of course, and maybe I'll be proven wrong and these stocks will continue to run (after their ongoing correction is over), but I would rather invest my money in stocks with PE and P/S ratios closer to earth.