This past week was another mixed week for solar stock as Crude Oil fell another 2.42%.
Hoku Scientific (HOKU) was the big winner this week as the stock closed the week up a jaw dropping 85.33%. The stock more than doubled this week before dropping about 20% on Friday. The company, which has a market cap of $91.52 million, announced a polysilicon supply contract with Sanyo. The contract is valued at $370 million and calls for Hoku to provide polysilicon to Sanyo Electronics over a seven year period starting in January 2009. The contract also provides for an initial direct deposit of $2 million to Hoku upon signing and requires that SANYO place approximately 30% of the total purchase amount in an escrow account with Bank of Hawaii. Hoku now plans to build a plant capable of producing 2,000 metric tons of polysilicon per year. The construction costs will be around $260 million. Also, each party have the right to terminate the contract if Hoku fails to raise enough capital for the plant. Polysilicon is in very short supply right now and the high rates still haven’t stabilized. Polysilicon shortages have been blamed for the lack of growth in the overall solar industry but more supply is expected to come on board in the next few years. You just need to look at MEMC Electronics (WFR) to see how the high prices have helped its stock.
As if the recent Chinese Solar glut wasn’t enough we are about to see another Chinese Solar IPO. JA Solar Holdings Co. has filed to sell 15M ADSs in IPO, Priced Between $12.50 to $14.50 Each. Will have to look into this company before I comment on it.
Merrill Lynch initiated coverage on Sunpower Corp. (NASDAQ:SPWR) with a ‘buy’ rating and a $52 price target.
MEMC Electronics (WFR) failed to build upon last week’s surge. Will it hit $50 this time is the question or will it go back to high 30’s.
I covered my short position in First Solar Inc. (NASDAQ:FSLR) this week as well.
Disclosure: I am long STP and ESLR. There is a good possibility that in I will either go long or short on the stocks listed in this article.