David White

402 Comments

    • Solar Gets What They Want, But Stocks Still Suffer [view article]
      The prospects of LDK and CSIQ remind me of an old FDR fireside chat adage, "We have nothing to fear but fear itself." Oct 07 10:17 AM
    • Solar Gets What They Want, But Stocks Still Suffer [view article]
      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. Oct 07 10:15 AM
    • Solar Gets What They Want, But Stocks Still Suffer [view article]
      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. Oct 07 09:53 AM
    • Solar Gets What They Want, But Stocks Still Suffer [view article]
      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. Oct 07 09:23 AM
    • Monday Outlook: Ascendant Fear [view article]
      You should probably also consider that the VIX exceeded 50 this morning. Historically that has often marked near term bottoms. Oct 06 09:52 AM
    • Monday Outlook: Ascendant Fear [view article]
      If everyone is really scared at the moment (i.e. sure there is more downside), then a contrarian would say that it is time to buy. Historically, when the market emotion runs too heavily in one direction, you should do the ooposite to profit. Add to this the fact that GS had predicted a couple of weeks ago that the downside bottom to be about $107 on the SPY. You get the feeling that the near tem bottom at least may be near. Of course, GS probably hadn't predicted this crisis, nor Congress's reluctance to address it. That could always add a little something to the downside risk. Still when you see stocks like PBR selling for around $30, it is probably time to buy. Oct 06 09:30 AM
    • Chinese Tech Stock Weekly Summary (Sept. 22 - 29) [view article]
      I should have mentioned that LDK has extensive long term contracts. Many of these have some price guarantee build in to them, especially the near term ones. This means LDK should be relatively immune to the coming slowdown. It shoudl be a great stock to own for the next 12 months, if not for several years to come. Oct 03 10:05 AM
    • Chinese Tech Stock Weekly Summary (Sept. 22 - 29) [view article]
      Solar stocks should get a push upward if the bailout bill passes the house. Improving the credit crunch will improve solar prospects. It will tend to allow oil to rise (or stay at elevated levels), which is also good for solar stocks. But which of them should do well into the future? LDK is well diversified geographically. LDK's margins are likely to expand in the very near future, so they will have room to go down again as the solar market becomes more competitive. LDK is building its own polysilicone plant. This should help margins. Further LDK is one of the leaders in adopting UMG solar manufacturing. This too should help their margins. LDK looks to go up in the current environment. CSIQ also looks promising. It has some geographical exposure issues. However, it too is one of the leaders in UMG solar manufacturing. This should allow it to have increased margins in the near term. Then those margins will allow it to remain competitive in the coming shakeout in the solar industry. It should go up nicely from its current price if the bailout bill (with the 8 year solar tax credit extension) passes. Oct 03 09:55 AM
    • The Market Hates Mosaic: Phosphates Not Up to Snuff [view article]
      I think this period was a necessary adjustment downward. Expectations were too high. Then it appears that the brokerages houses are to some degree manipulating the market so that the move downward it bigger than one would expect. The market conditions play into their hands also. I am sure they will make money on the big moves as they seem to be orchestrating them. As a trader/investor I just need to sync into what they are going to do a little bit better.

      Longer term, I think we are in a bull Ag market. The worl population is growing at the same time the farmable acreage worldwide is shrinking. This means farmers will continually have to produce larger crops from smaller acreages. Fertilizer is a main element in allowing them to do this. The long term trend for fertilizer is still going to be up. The bottom is unikely to fall out. Pessimism reigns today. Tomorrow may be a completely different story. Potash demand looks strong. Potash inventories are extremely low. Potash margins are over 50%. Phosphate may be hurting a little, but MOS and POT are still going to do great. People are not going to stop eating. In that sense the Ag stocks are effectively staple stocks. We just have to wait for the rebound. This seems likely to be very close to the bottom.       Oct 02 04:07 PM
    • Trying to Defend Mosaic [view article]
      I should note that the current average 1 year price target on MOS is $182.86 and on POT is $281.63. These seem likely to be adjusted downward. Even so, these stocks still have tremendous upside from their current prices. I just don't know how much more carnage is due from the hedge funds. Of course, once the direction of these stocks reverses, the hedge funds will sell anything else but these stocks. In fact it seems likely they will be buying these stocks. Oct 02 11:39 AM
    • Trying to Defend Mosaic [view article]
      In response to this huge downward movement MON has issued a press release. MON has upped its FY EPS guidance from $3.58 to $3.64. This doesn't sound like they expect the seed market to suddenly disappear. This should help the fertilizer stocks as they are intimately tied to seed. Oct 02 11:31 AM
    • Trying to Defend Mosaic [view article]
      It does seem that they could go down more if both Merrill Lynch and GS are downgrading them. They probably shouldn't. However, it does seem that the 1 year price targets are likely to come down. Each time a brokerage firm lowers a price target, it seems likely these stocks will get hurt. Since some of that seems likely in the near future, it does seem there might be more carnage in these stocks whether they deserve it or not. Of course, eventually there will be an upswing also. If the house passes the bailout bill, that could be the trigger for a move to the upside. MOS has definitely been hit hard. Oct 02 11:22 AM
    • Trying to Defend Mosaic [view article]
      Fertilizer is still a bargain for farmers. The incremental increase in crop yields is much higher than the small percentage that they pay for fertilizer. Thus the argument about India's price sensitivity doesn't really work. Fertilizer doesn't really make food more expensive. However, the overall demand for food does effect how much food farmers want to produce. They want to keep prices high. They will want to produce less, if food prices drop to any appreciable extent. If that happens, the demand for fertilizer will go down. I don't see the demand for food weakening appreciably from current levels barring a fairly strong world wide recession. Of course, this may happen.

      The hedge funds do seem to be divesting. I have no idea when they will stop. There are approx. 43 days to the next redemption cut off for hedge funds. They may continue to sell until near then. They probably all have a lot of Ag stocks. GS got into the act too by downgrading MOS. I am not sure there was a legitimate reason to do this. This smacks of GS manipulating the market again. They will make more money as call options are redeemed for nothing. Then they will buy a lot of calls themselves before the upgrade the stock. They are shameless. The fundamentals of MOS do not justify the GS downgrade. The TTM earnings are $6.49 (Yahoo finance). This puts the TTM PE at $46.60/$6.49 = 7.18. The last estimate for 2009 earnings for MOS was $13.99 on Yahoo finance. If you cut this to $12.00 due to phosphate weakness, you still get a PE of 3.88 for all of 2009. It hardly makes MOS a sell. Of course, GS may justify their position using the hedge fund divestiture reason. There is some validity to this. Still it smacks of market manipulation to me. I would be very surprised if GS is not making a lot of money playing this stock through its current swing downward. I am sure they will make more money playing it upward. They're sharp, but sometimes it seems that there ought to be a law!       Oct 02 10:18 AM
    • LDK Solar: Now Bottoming? [view article]
      I'm not sure whether I left it out or SA did, but I meant to include a significant point about UMG. It uses a much less pure polysilicone. This is about 1/10th the cost of the high purity polysilicone used for multicrystalline wafers. This should reduce LDK's cost (increase margins). Also LDK should be able to use much of the scrap it was throwing away to help it produce UMG polysilicone wafers. The fact that this scrap no longer needs to be waste should also help margins. Sep 29 01:38 PM
    • Why This Bailout Can't Work - And What Will [view article]
      You have made a few valid points. However, what you are advocating would cause more than just political unrest. There would be rioting in the streets, etc. There would be good reason for this. Social programs could not exist under your scenario. School budgets would have to be drastically cut. It seems likely police and fire budgets would have to be cut also. However, you would be needing them more with the increased violence. Think again!!!

      The U.S. solution to its economic problems today would seem to stem more from energy and imports. The largest contributor to the trade deficit seems to be oil imports. Cars are probably a close second. Congress's recent support of the U.S. automotive industry should help (i.e. the $25 Billion in low cost loans for development). The approval of offshore drilling should help. Still every American must work to conserve gas/oil.       Sep 29 11:02 AM
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