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Three Reasons Solar Sell-off May Be in Early Innings

selloff in solar because of valuation - what is this simplistic generalization?
we get examples like FSLR ENER..., but what about SOL WFR TSL that trade with PE's close to 10 for this year and many others that are well below?
most of this forward estimates are based on oil at 90-110. so companies that are growing well above 20% and have PE's in the teens or lower are overvalued?
let's get real and stop being like deers in the headlights. we will always get price flactuations since this is the nature of the market. read about it in articles that deal with market psychology.
are we in the first inning of major selloff? only time will tell. if it does it will be confluence of events that will drive the selloff. they will all create enough fear to make it happen.
saying that the selloff is because oil dropped to 100$ or the wrong claim of overvaluation (the wrong claim is because of the generalization, there are few that sure are overvalued), is just small part of what is driving and what will keep driving stock prices in the solar industry or in many others.

Solar Breaks Oil Price Dependence

we need to understand that the solar market and the solar stocks are 2 different things, especially in the short term.
to read a comment like the one of sirfisup is quiet discouraging:"I must say that the writer is a pure amateur and knows very little about solar technology and where its heading. Sand is about one third of the earths natural resource and is the primary commodity to manufacture silicon. Solar technology efficiencies are improving significantly and of all the alternative energies is the cleanest form of energy. The writer must have very little regrad for the emerging economies of China and India and unfortunately a very poor understanding of the fundamentals of capitalism. The only reason why you haven't received many more retort replies is simply because you are an idiot."
this comment itself shows very low intelligance and no knowledge of the stock market and how it works. from the comment one might assume that solar stocks are heading only one way and will not have pullbacks of any degree. this is not the case.
investing in stocks is sensitive to many outside variables like the availability of money (interest rates), alternative investments, sentiment, political climate and many others.
they all translate to valuations. when everything is good we can get double the valuation relative to the bad times.
the fact that silicon will get cheaper and that the solar technologies are advancing will carry risk that is as high as is the opportunity. the solar industry will be commoditized all along the food chane. while costs will be much lower so will go the ASP's.
history shows us how things work and we will be fools to ignore it.
while i am a huge solar fan, i will never close my eyes and ears to the presence of risk. any growth industry carries risk and investing in stocks in these industries is also risky.
i can only wish investing was as simple as some of the commentators make it seem. we were all much richer. since it's not, please invest with your head and not with your heart. it is way more profitable (i started investing with my heart and fell in love with investments and it didn't work well. sometimes it's worst than a divorce as you can pay much more than half) :)

Solar and Cash: The Big Boys Have an Answer - Do You?

maybe i'm dumb, but didn't JASO raised 400,000,000 in convertible bonds? isn't it debt?

Solar and Cash: The Big Boys Have an Answer - Do You?

good article.
i like the way you point out the risks while not making a stand as it's almost impossible to point out future winners and losers in an evolving industry.
i totaly love SOL (long). it seems they look great almost in every aspect, cash needs aside. since they are wafer suppliers cash needs are lower than for the integrated companies and since it's now a cloud over the manufac.. it seems the company is in better shape than many others. when cash needs will cease to be a problem the company will be less desired as the risk for integrated companies will be percieved as lower.
yet, there is one thing i miss in all the articles regarding solars, they all deal with the manufacturers along the food chain, but i saw none (maybe there are few, but i didn't see them), that deal with the other related companies.
INFRASTRUCTURE and EQUIPMENT. these are two sectors within the industry that will probably still grow even if pricing and margins will be volatile for the manufac...
our goal is to find the cheap stocks in these sectors or to find market leaders that don't have huge price premium.
i already pointed out SPIR (which i'm long), but i'm looking at other companies like FLR ASYS SOLR .... for good entry points.
everyone must do thier own due dilligence on each stock as they are very different (what they do, how big they are, how much risk they carry...) and if they like a stock then it's time to calculate entry price based on the return you demand that will create a high risk reward ratio.
if the price you want can't be achieved you stay out, or you can make a multiple step plan which basically calls for different levels of entry prices (taking into account the number of shares you want to buy). at the end of the proccess you need the average price to be equal or lower than the initial price you calculated. this method is more compicated and more risky so it is better for most to stick with the simple method.

Is There Value in Silicon Solar PV?

you use the early stages of growth which is unsustainable.
do you really think that CSIQ will have 600% earnings growth in 2009 and 2010?
i only commented on the reason we don't use 1 year data, just like the reason we calculate moving averages and exponantial MA or the reason we use logarithmic scales and not linear.
if it's not understood you can use the unsmoothed method, but it will probably cost you somewhere down the line.
even here with CSIQ, if you think under 1 is good measure of value, you can pay 500$ for this stock and stay well under 0.5.
do you really think it's logical?

Is There Value in Silicon Solar PV?

these PEG numbers are not how we usually calculate PEG, so please try and use the standart method.
if a company made 1 cent last year and will make 1$ this year and 2$ next year and share price is 50$ with 50 million shares. we get PEG of 0.05 using the above method. if we will apply the concept of PEG of 1 the stock price will be 1000$, while next year we will get PEG of 5 which will take the price to 200$. (all is theoretical and is given for example purposes).
in order to smooth the results and get better picture of the longer term picture we use the 5 yr. expected growth which gives us very different results.
we still get very low numbers compared to other sectors, but no way near these results.
overall good post as it's very informative and comparative.

It's Not Easy Being Evergreen - Cramer's Lightning Round (7/9/08)

i just wonder if anyone here follows cramer.
i used his picks as a contrarian. it always seems to me that he is picking longs at the highs and shorts at the bottom.
2 years back i saved tons of money on CEPH using his advice. when he said to buy when the stock went to 80 i ran to the hills and it took a nose dive.
it also seems to me he is like day trader. one day he says FSLR is huge buy, next day he says CEO sells tons of shares so we don't like FSLR, few weeks go by and again he loves FSLR.
i wonder if someone is calculating his returns - it will be very interesting to see if he's in the green or if he's a consistant loser.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

since it seems there is no one who knows how to paste the excel spreadsheets we'll have to make things much shorter.

regarding SPIR

the big growth comes from the solar equipment segment akthough there is sime growth in the semis segment.
the company has a lot of customers which is a positive.
the company is getting advances more than deposits which can make the cash flows sufficient to achieve growth objectives.
the company has customers in the PV and the thin film segments, which may act as support if one of the technologies lose in this wild race.
a lot of companies are now building new facilities and after they will finish with all the land developement, reactors and other big items they will need the equipment to produce the end products, this equals to lot of growth still ahead (unless the industry cracks very hard).

we can see that the growth in the solar segment is as good as many of the companies we look at daily in this sector.
if there is a decline in poly prices which may hurt margins for the other companies we watch, it may have positive impact on SPIR if some will buy new lines in order to get more efficient. it will probably have less impact than on the others, unless prices crash and than everyone is game.

i hope this gives some clue to how I LOOK AT THE COMPANY AND THE SECTOR. there are some other data that we can look at and some basic assumptions regarding this industry when we try and analyze these numbers, but without using the excel it's too much work and most of it was posted in many parts in the past.

in the next few days i'll deal with the other companies, but i will use more words and less numbers.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

i'm dying here tring to post numbers.
i don't find a way to copy straight from the excel.
is there a way? if so, how?

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

all the numbers are at 000,000$.

sales

2006 - 20.1
2007 - 38.4
2008 Q1 - 14.9

operating P/(L)

2006 - (8.3)
2007 - (3.7)
2008 Q1 - (0.2)

balance sheet

31/12/06

cash and equiv - 1.54
accounts rec.. - 4.01
inventories - 4.22
deposits - 2.58

equipment L.C. - 0
accounts payable - (1.98)
accrued liabilities - (5.01)
advances on contracts - (6.4)
L.T. equipment L.C. - 0
L.T. advances on contracts - (1.82)

31/12/07

cash and equiv - 2.37
accounts rec.. - 12.77
inventories - 18.51
deposits - 2.48

equipment L.C. - (1.17)
accounts payable - (2.91)
accrued liabilities - (6.06)
advances on contracts - (23.6)
L.T. equipment L.C. - (1.75)
L.T. advances on contracts - (1.95)

31/03/08

cash and equiv - 2.2
accounts rec.. - 8.74
inventories - 21.19
deposits - 2.00

equipment L.C. - (1.17)
accounts payable - (3.92)
accrued liabilities - (6.34)
advances on contracts - (21.47)
L.T. equipment L.C. - (1.46)
L.T. advances on contracts - (1.77)


cash flows

operational

2006 - 0.48
2007 - (7.27)
2008 Q1 - 0.94

investing

2006 - (9.35)
2007 - 5.88
2008 Q1 - (0.54)


Solar segment

2006
sales - 6.99
oper. P/L - (4.01)
2007
sales - 23.1
oper. P/L - 0.76
2008 Q1
sales - 10.67
oper. P/L - 0.33


we can see good growth.
there are problems with the tight liquidity of the company.
company gets more advances than deposits.
pretty high level of inventory, should work it down.

it is likely that the biomed segment will be sold or some kind of spin off which will improve the bottom line of the company as a whole.

i will continue this later.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

first here is some general data about the company SPIR and the market

SPIR – Spire Corporation
Corporate Profile
Spire Corporation is a Massachusetts corporation incorporated in 1969 with its principal offices located at One Patriots Park, Bedford, Massachusetts.
Spire Corporation is a global solar company providing turnkey production lines and capital equipment to manufacture photovoltaic modules worldwide. Spire Semiconductor provides processing technology for Spire’s silicon solar cell manufacturing lines and produces and sells custom gallium arsenide cells for solar concentrator systems. The Company’s Spire Biomedical subsidiary is a leader in hemodialysis catheters and implantable device processing services.
The Company’s revenues for the past five years have ranged from $15.8 million to $38.4 million.

We have been in the solar business for over 30 years and have been active in research and development in the space, with over $100 million of research and development conducted and 50 patents granted to date, as well as cell and module production, having been a pioneer in the early development of solar technology. This expertise has provided the platform and expertise for our manufacturing equipment. In 2007, we nearly doubled 2006 annual revenues and we believe it is possible to grow revenues significantly again in 2008 based upon current orders as of December 31, 2007. We have equipment deployed in approximately 50 countries and have enjoyed the patronage of some of the world's leading solar manufacturers including First Solar, BP Solar, Kyocera, Sharp, Hitachi, Evergreen and Solaria Energia.



Global Annual Solar Power Installed Capacities (MW)
2006A 1,744
2007E 2,308
2008E 3,071
2009E 4,029
2010E 5,587
2011E 7,630
Global Solar Industry Revenues ($MM)
2006A 10,580
2007E 13,832
2008E 16,333
2009E 18,068
2010E 24,223
2011E 31,463
* Source: Solarbuzz, 2007.



Currently, the bottleneck in the industry lies in polysilicon supply. The large growth in the solar space has resulted in greater demand for polysilicon than available, resulting in considerable increases in price for both long-term contract prices and spot market prices. Polysilicon consumption increased from 5,100 metric tons ("MT") to 20,700MT from 2001 to 2006 respectively, with the top seven polysilicon producers accounting for nearly 96% of the industry's total production capacity, according to Solarbuzz. While the dominant players in the industry have enjoyed increasingly higher margins, the huge demand for polysilicon has attracted numerous new entrants into the market to capitalize on the opportunity. In addition, the dominant players have significantly scaled their production to also meet this demand. As a result, a large influx of polysilicon is forecasted to enter the market in 2009-2010 with incremental capacity being added in 2007 and 2008. With demand met by this time, the next bottleneck in the industry will occur with the turnkey equipment manufacturing needed in the latter stages of the value chain.

there are risks associated with the company which are mainly very low liquidity at this point. off course there are many other risks and anyone can read the 10-K of the company to learn about all the risks the comapny sees at this time.

next post we'll go over some financial data and more general data and try to assume what's the case for and against the company.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

joy 11 in order to answer this question we need to break it into peaces and it will take some time.
i'll try to do that and will remind everyone who will read this that some of what will be written will be facts from data that is open to the public and some will only reflect my take on the data and i'll also try and explain why.
the first step will be the easy one as i'll try and explain why i like SPIR better than the rest.
i'll post it during today at some point.
it is important to say that there might be better possible returns on other companies but when i add the different kind of risks that there are (emphasizing I as it is my opinion) for the players in the industry i think the company offers good reward with less risk than many others.
anyway i'll post it later today.
i'll try and go over the rest asap

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

jack
PWE looking good
just wanted to ask why do you think they blow out estimates?
thanks

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

alpha14

first i want to apologize since i didn't see the link at the bottom.
if i agree or disagree is irrelevant since now i know who said what and i have the tools to evaluate the data by myself (regarding pichel we all know his views and his track record, but still we need to check what he says and make a decision)

please accept the apology and thanks for the data

:)

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

alpha24

again you say things but do not give any data.

i don't use google for research but i do use reliable reaserch firms. if you were to check what i said about WFR you would have seen that there are WFR estimates and reaserch firm estimates. but in any case, at least i give references, you just say things and give no data from any credible source (search google isn't a source, and if that's the case i'll tell you the same, check google and you'll find many sources that say that we will still have supply and demand problem.)

regarding utilities you are correct, petrolium was just 2% at 2006. natural gas was 20% and coal was 49%. all 3 tend to move together in the bigger trend. that's 71% of US electricity production. as usual here is a link for this data www.eia.doe.gov/kids/i...
but i guess you think that shipping costs for polysilicon and wafers (in cases it's needed) is more important than price of key raw material in the utilities costs.

as i said, we will all be thankful for references for your data so we will all get the correct picture and bail if needed. but for some reason you insist on saying stuff and not backing it up with real research. i have no clue why you do that and frankly i don't care. i do care about how it can influence some people and for this reason i will keep criticizing posts that are not backed up with real data, which can be checked by everyone.

and if there are so many researches out there in google from reliable resources it will be really easy for you to post a link and will also be very nice as we will all better educated and will have more data with which we will base our decisions.

good luck.