Tax Reform in This Election Year: It's Not Likely
Walmart's New Health Food Push: Is It Too Hard to Swallow?
Over the past few months, solar stocks have had more than their fair share of ups and downs. Last month, they were so volatile it seemed as if I was writing an article about another solar play every other day, introducing investors to the sector by casting the characters in a fictional movie to be called Solar's Eleven, encouraging buying on breakouts in this article, and warning investors to drop them as if they were poorly selling music artists in this article. (Yes, I go over the top sometimes, but it's all to help you better understand how the stock market works.)
I know buy and hold investors don't understand how I can change my mind so quickly about the same companies, but as you can tell from the charts of stocks like Evergreen Solar (NASDAQ: ESLR), Solarfun (NASDAQ: SOLF), DayStar Technologies (NASDAQ: DSTI), Akeena Solar (NASDAQ: AKNS), Canadian Solar (NASDAQ: CSIQ) and China Sunenergy (NASDAQ: CSUN), remaining nimble is key to profiting from this sector's volatility. In fact, only JA Solar (NASDAQ: JASO) and MEMC Electronic Materials (NYSE: WFR) have managed to hold near their highs.
So, what changed? Perception. While these companies all still have great potential, they are speculative and in bear markets, speculative stocks, especially those that don't continuously put out spectacular news, get crushed -- as shareholders in Apple (NASDAQ: AAPL), Baidu.com (NASDAQ: BIDU) and VMware (NYSE: VMW) have learned the hard way.
Sure, oil and other commodity prices have dipped and even after dropping over 30%, stocks like First Solar (NASDAQ: FSLR) and Suntech Power (NYSE: STP) still sport some pretty hefty PE ratios, but you have to remember this is one fast growing sector. And, just to add to the fun, there's a new solar IPO with some seriously booming revenues and profits in Renesola (NYSE: SOL) that just yesterday debuted under the radar.
Since short sellers are sitting on some nice gains and will probably look to cover some of their positions before these companies report earnings in the coming weeks, I believe the time is right to jump back in here. Maybe not with both feet, but scaling into positions has always worked for me. I don't expect any of these stocks to go straight back to their highs-not in this market-but I do think these stocks will bounce solidly off their lows here.
Disclosure: Long SOLF.
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 1 of 1)
1-30-2008 @ 1:28PM
Gumby said...
Ah no, those solar companies arent growing fast enough... They are only looking only at installation contractors for revenue growth. They are ignoring potential off grid solar module kits that can be self installed by do it yourself fellas. It means you dont need to know any electricity wiring at all. It is much similiar to solar porch lights or lawn lights that came with mini solar modules the size of postcards. I want one kilowatt module kit completed with regulated power supply case that I can hook my small 800 watt room air conditioner to. As long as the sun shines, my AC will run all by itself with some power to spare for my other accessories like TV, stereo, or whatever. The lowest price per watt known is approaching $1 a watt which mean that it should cost around $2000 for a one kilowatt solar module kit compared to $10,000 per kilowatt installed on the roof before tax credits which may reduce it to still high $6000-7000. It is because it will be installed by expensive labor and expensive electronic equipment that is required to make it possible to sell back to the utility . It is called an inverter and it is very expensive!!! The brightest future for solar modules is for off grid type of usages that you dont need to install it permanently and it cant be hooked into any of your house outlets because of special connections It will be stand alone solar panels that you can take with you when you move. It is great for frequent movers.
1-30-2008 @ 1:28PM
Gumby said...
If there is demand for off grid type solar modules, I wouldnt be surprised to see solar modules makers grow hundred fold in ten years. There is so much demand for off grid solar modules that you see everywhere that is mostly used by government in the far away places or those call phones on highways. Those call phones comes with slightly larger solar modules about two square foot panels or so. One kilowatt solar module kit should be about ten by ten foot square which is a bit large but it can power your room air conditoiner so you dont have to turn on your big central air conditoining for your whole house if you only need to cool one room which you watch football on TV while your wife is away shopping or whatever... Your central air conditoining need not be the only source of your home cooling. You can turn up the thermostat way up so to reduce dependence on your big central AC and go to your room air conditoner powered by your solar module kit and watch TV , Enjoy!
1-30-2008 @ 1:28PM
Gumby said...
This is a good way of cutting down the demands on utilites that are scrambling around to build coal fired plants, nukes, or whatnots.... You can be independent yourself by installing your own one kilowatt or two solar module kit all by yourself! and save labor costs and complicated rubbish... Keep it simple go to a hardware store and buy it and bring home, That is it... One kilowatt solar module or two kilowatt solar modlue kit or more. only $2000 each before tax credits if the government would approve credits for off grid solar modules, I dont know yet.... I think they will have no choice to to approve it even if it will mean less jobs for installation crews and other complex parts that must go with the grid installation. Off grid solar modules is the future!!! many times more sales that way.. Off grid is best!!!
1-30-2008 @ 3:03PM
Beltway Greg said...
Why do you change your mind so quickly....because you didn't know what you were talking about in the first place. Where do you think FSLR will be in a year? Cue the crickets.
Beltway Greg
1-30-2008 @ 2:57PM
Beltway Greg said...
Look you recommended ESLR back on Dec. 27. It was $18+. Today it is at $12. Obviously it didn't have "legs." These solar stocks by and large are dot.coms are all over again. A couple will make it but not the stocks you're touting. And if oil drops forget it. Hell, it dropped more than Apple and it isn't coming back.
Beltway Greg
Just doing my service for the on-line community.
1-30-2008 @ 3:12PM
tim said...
Yes and thats why I preach that you should always take your losses quickly. Whenever you see an article of mine on AOL, you should also read my blog because I give daily commentary on the stocks I trade as well as providing real-time updates on my trades here:
http://www.covestor.com/mbr/timothysykes/trades
As you'll see, I took a nice 5% gain on ESLR. It's all about real-time information, just doing my service to the online community :)
Tim
http://www.timothysykes.com
1-30-2008 @ 3:41PM
Taz said...
I picked up SOL this morning after reading your posting this morning on your home page.
So far so good ^^
1-30-2008 @ 8:44PM
Beltway Greg said...
After taxes? But we can conclude based on all available evidence that ESLR didn't "heat-up" and Renesola was profiled in IBD yes? Hardly under the radar. Perhaps it doesn't deserve to be on the radar. Take all of your cash and put it in GS and call me in twelve months. Go to the beach and enjoy life.
Beltway Greg
2-04-2008 @ 1:21PM
Windsun said...
Most of the comments I see about solar and renewables in general show a very basic ignorance of the realities of solar electric power.
We have been in the solar business for almost 30 years, and for most of that time we have seen far more hype than fact.
One fact that many people seem to totally miss is that well over half the sales rely on large subsidies - some up to 70% of the cost. When (not if) the subsidies go away and solar has to compete on it's own, sales will drop accordingaly.
And there is no $1 a watt photovoltaic panel - that seems to be another myth that has recently taken hold. If you are prepared to buy 100KW of solar panels, then you might find some for $3 a watt, but in consumer quantities you are looking at around $5 a watt, just for the panels.
With 25+ years experience in renewables, there is not a single solar stock that I would buy at this time.