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Solar stocks follow SunPower lower

  • Solar stocks are underperforming (TAN -4%) amid a market selloff after SunPower (SPWR -8.5%) posted mixed Q2 results and provided Q3/2014 guidance ranges with midpoints below consensus.
  • SunPower also announced it's building a new plant (Fab 5) that could go live in 2017 and eventually produce 700MW+/year of modules, boosting its capacity by over 50%. "Our share has been in single digits for a while and demand for the last 24 months suggests that we can expand share," says CEO Tom Werner.
  • The announcement comes 6 weeks after SolarCity (SCTY -3.5%) unveiled plans to build a 1GW+ module plant with newly-acquired Silevo's help, and said it will later build "one or more significantly larger plants at an order of magnitude greater annual production capacity."
  • Minimal capacity investments, together with rising U.S./Asian demand, have helped module prices stabilize following gut-wrenching declines in prior years.
  • Also: SunPower stated on its CC (transcript) it hasn't decided whether to create a solar project YieldCo similar to SunEdison's (SUNE -4.3%) TerraForm Power (TERP -4.7%), which recently turned in a strong IPO. "It does not look like the company is likely to make a decision anytime soon," says Raymond James.
  • Nonetheless, Brean has upgraded SunPower to Buy, citing optimism about strong demand and healthy pricing.
  • Other notable decliners: FSLR -3.6%. TSL -8.4%. JKS -6%. CSIQ -5.6%. CSUN -5.7%. YGE -5%. SOL -4.5%. ENPH -5.8%. RGSE -4.5%. HSOL -3.9%. JASO -4.4%.
Comments (7)
  • 7622061
    , contributor
    Comments (25) | Send Message
     
    SPWR is extremely undervalued. They put 100 MW on their balance sheet this Q. That's at least $200m cash later. Given project sales, and how they vary per Q, people have no idea how to value solar in general and this company in particular. SPWR's plan of 500 MW in a Holdco is over 1 bn in cash to come. The stock price may go down a touch more due to this "bad" news, but this is a great buying opportunity, and if they start selling off from their Holdco next year, that's a HUGE a cash cow (which of course they could use to declare large EPS or to develop more, soon-to-be lower cost per W projects on their balance sheet to do that later). This company is eons ahead of others in understanding how solar will develop from here. (But I will admit that it's pretty astounding that for the fifth quarter in a row they have to admit to not having enough product to sell; as I've mentioned in comments on SPWR on SA before, doesn't matter what business you're in, if you don't have enough of what you sell to meet demand, this is a significant management problem.)
    1 Aug, 12:50 PM Reply Like
  • djkidm
    , contributor
    Comments (402) | Send Message
     
    Yep, capacity issues have finally caught up with them, as far as market perception is concerned. I agree $SPWR is undervalued, and in a great position going forward. Short term, however, I feel the stock price will suffer, and I am looking to reposition going forward.
    1 Aug, 03:01 PM Reply Like
  • 7622061
    , contributor
    Comments (25) | Send Message
     
    I don't think stock price will suffer too long. Q2 may be soft across the sector, holding things down for August, but stock price is forward-looking so post-Q2 earnings reports, I see SPWR, TSL, JKS and maybe CSIQ sloping up significantly over the fall, with the good Chinese names matching highs of earlier this year and SPWR hitting 50 mid-Nov.
    1 Aug, 03:38 PM Reply Like
  • GameKing13
    , contributor
    Comments (343) | Send Message
     
    Maybe things will look brighter after the summer- usually good times for Solar companies.

     

    Hopefully my RGSE turns around
    1 Aug, 06:14 PM Reply Like
  • Gumby
    , contributor
    Comments (2532) | Send Message
     
    I am constantly puzzled at the solar energy guys!! They are focused solely on the conversion of sunlight into electricity or so called photovoltaic technologies. We have Sunpower, First Solar, Solar City and those Chinese ones.. What is left off is the more valuable concept of converting sunlight into heat . It is easy to confuse this with "concentrated solar power" because "concentrated solar power" use concentrated sunlight to create heat for generating steam needed to crank steam generators to produce same electricity as photovoltaic does. Photovoltaic remains to be cost competitive against concentrated solar power technologies. What I am talking about is heating your indoor quarters directly with sunlight without having to convert sunlight into electricity. Indoor heating is a valuable product because we spend about half of our utility costs to heat indoors by using natural gas or fuel oil as well as firewood, etc. We are not aware that we can really use sunlight to heat indoors directly, even if it is sunny and chilly outdoors. Outside temperatures during wintertime has very little effects on potential ability to heat indoors with direct sunlight. We still ignore the most efficient source of solar energy that is indoor heating. We can capture close to 100% of the sunlight for direct heating while we can only manage to capture around 20% of the sunlight for electricity (photovoltaic) We waste 80% of the sunlight that hit our solar panels (photovoltaic) while we can waste very little of sunlight that can be used to heat indoors directly. We are brainwashed by buzzwords like kilowatts or other photovoltaic term words that advertisers keep spouting off all day and night.. Direct solar heating are not measured in kilowatt hours though they can , but the more accurate solar term for direct heating is called British thermal units or therms that is commonly used as units for natural gas that utility consumers get charged for heating indoors with gas furnaces or oil furnaces We rely on the solar experts who know that direct solar heating is more effective and more productive than photovoltaic. Direct solar heating technologies are already proven and also manufactured for mostly industrial customers that need free heating for their industrial buildings , etc. We can borrow those same technologies for residential consumption. Strangely enough, those manufacturers of direct solar heating are private companies. Why they don't want to go IPO at all, I cannot honestly understand at all! Are we trying to protect our natural gas producers from direct solar heating manufacturers ? Even those direct solar heating manufacturers are prevented from applying for federal energy credits that goes only to photovoltaic manufacturers or installers. I thought that global climate issues are already pressing enough to make us start clearing away all the roadblocks.. so far, this has not happened.. There is lots of buildings like dilapidated public schools or tenant housing that are freezing indoors for lack of heat due to unaffordable cost. It is as simple as pulling open your drapery and letting in sunlight. Nothing so complicated about direct solar heating that our overcomplicated minds cannot figure it out..
    2 Aug, 05:29 PM Reply Like
  • fxali
    , contributor
    Comments (8) | Send Message
     
    well worth to know that as Crude Oil Prices Drop so the Solar Sector Stocks will do so, and their movements are correlated almost 60% if the whole sector is falling then it is better to short WTI contracts
    3 Aug, 10:01 AM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    Crude will likely stay around $100 or higher for years. At $100 it's a positive for SCTY and TSLA. NatGas rising is great for both too because TSLA will profit from the batteries sold to SCTY. Rising oil and electricity actually helps TSLA.
    3 Aug, 06:31 PM Reply Like
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