I don't think I've ever written a positive word on JASO as they are in the middle tier, essentially a jobber for the solar space. The company make various feedstock products to the final product makers, while being dependent on the core technology and "root" feedstock polysilicon from the likes of LDK Solar (NYSE: LDK) and MEMC Electronics (NYSE: WFR). So it has a timing issue and margin compression issue. The company is facing lower final pricing of their products while having locked in longer term "commodity" pricing at higher prices. So its raw costs are not falling as fast as its own pricing.
The poly guys mentioned above and companies like Sun Power(NASDAQ: SPWRA), First Solar (NASDAQ: FSLR) andSuntech Power (NYSE: STP) don't face these pressures as intensely, though that may not matter much today. STP reports on the 20th this month and I think it will give a clearer picture of the space. Meanwhile SPWRA keeps closing significant deals and FSLR reported the best and has little if any of the funding concerns. So for the leaders, it's a question of how low do they go before the long term positives catch up. Meanwhile, a few of the smaller shops like JASO are in a race against the credit crunch because they need to be able to renegotiate some of their longer-term input costs.
LDK and WFR are still companies that I feel are uniquely positioned, as both have a partial oligopoly status as polysilicon suppliers. In the $15's and lower, it's getting to the point where I may again trade around my core position and look for that beta pop on any significant Naz bounce. Also, this stock could move 50% higher and still be exceedingly cheap on almost any value criteria.
Analyst Michael Molnar of Goldman Sachs took a harsh tone on the solar sector today, slashing his opinion to Sell on both First Solar, Inc. (NASDAQ: FSLR) and SunPower Corp. (NASDAQ: SPWRA). Specifically, First Solar was slashed to Conviction Sell from Buy, while SunPower was dropped from Buy to Sell. In a note to clients, Molnar explained, "We strongly believe that SunPower and First Solar are two of the best solar companies in the world and that both will be part of the growing solar industry for years to come. However, in our view, even these companies will face headwinds in a market that is oversupplied with modules."
Specifically, "the risk of oversupply in the solar market will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market," said Molnar. He added, "We believe that liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future, given fears of their ultimate cost in a bad world economy."
As a whole, Goldman maintains a "cautious" view of the solar sector -- and the brokerage firm isn't alone. Piper Jaffray also weighed in on solar firms today, with a warning that higher credit costs could reduce average selling prices by an additional 6%. "The renewables industry depends on access to credit, and for the moment, the credit market remains closed," Piper stated. "We believe the cost of capital on renewable projects will increase due to higher bank financed interest rates, larger spreads, and more upfront fees." For 2009, Piper Jaffray predicts that companies' average selling prices will fall by 15% to 21%.
This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.
"An Obama administration is likely to be very aggressive in subsidizing and promoting alternatives, including a windfall tax on oil firms to support development of alternative energy; SunPower Corp. (NASDAQ: SPWR) is our pick to play an Obama victory," says Elliott Gue in The Energy Strategist.
"Obama's energy plan calls for generating 10% of electricity from renewable sources by 2012 and 25% by 2025, an aggressive goal when you consider that less than 3% of America's power comes from non-hydropower renewables today.
"Obama has also proposed a windfall tax on oil companies that would be used to support the development of alternatives like solar and wind power.
"SunPower manufactures and sells photovoltaic (PV) solar panels for the residential, commercial and utility-scale markets.
"Residential and commercial solar systems are solar panels installed on the roofs of homes and businesses, designed to supplement power supply from the electric grid.
"And SunPower recently won a contract with Florida-based utility FPL to build the largest photovoltaic plant in North America, a 25 megawatt utility-scale plant in DeSoto County, Florida.
This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.
"Through the campaign season, Barack Obama has spoken at length about the need to boost spending on alternative energy; if he was elected, that should be good news for solar power company SunPower Corp. (NASDAQ: SPWR)," says Roger Conrad, editor of The Utility Forecaster.
"Obama has discussed both the need to increase U.S. energy independence and to reduce carbon dioxide emissions blamed for global warming.
"The real promise for Sunpower, a leading manufacturer of solar panels, is in constructing utility-scale plants. The first of these is a 280-megawatt unit to provide power for Pacific G&E. Utilities in more than two dozen states, including California, are moving to meet mandates to get up to 20% of power sold from renewable sources.
"That's likely to become a national mandate under an Obama administration. Unlike homeowners and small businesses -- the primary customers for solar panels -- utilities are basically recession-resistant customers capable of dishing out huge contracts.
"Sunpower's move in that direction takes it to a whole new level of sustainability and growth. The shares are down on the financial crisis, as bankrupt Lehman is holding shares that could dilute the stock by around 3%. That gives aggressive investors a new opportunity to buy up to 80."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.
Which stocks would benefit from a victory by either Senator John McCain or Senator Barack Obama? To help investors sort through the sectors and stocks best positioned to benefit in a post-election environment, we posed this question to some of the nation's leading financial newsletter advisors.
Importantly, this is not a partisan report; each participating advisor has provided a favorite stock for both candidates, focused not on political preferences but unbiased stock analysis. Below we feature those stocks and ETFs that the advisors believe will be the winners depending on which candidate prevails.
SPWR opened this morning at $87.64. So far today the stock has hit a low of $87.57 and a high of $93.93. As of 12:55, SPWR is trading at $93.26, up $14.69 (18.7%). The chart for SPWR looks neutral and S&P gives SPWR a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think, but willstill leverage nice returns. For this particular trade, we will make an 11.1% return in just four months as long as SPWR is above $55 at December expiration. Sunpower would have to fall by more than 40% before we would start to lose money. Learn more about this type of trade here.
SPWR hasn't been below $55 since March and has shown support around $71 recently. With the way the political climate is shaping up, it looks like some form of solar power should be here for quite a while.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in SPWR.
Minyanville's Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. Here he answers a reader's burning question about "green" stocks. For more original thought, visit www.minyanville.com.
Professor Udall,
Do you have any opinions on Zoltek Companies, Inc. (NASDAQ: ZOLT)? My wife wants me to buy everything "green". Her last "green" company idea was General Electric (NYSE: GE). I know, right? I bought a little just to quiet the noise level. I'm into a little SunPower(NASDAQ: SPWR) and Evergreen Solar (NASDAQ: ESLR). Does Zoltek have legs?
Thanks,
Minyan L.
Minyan L.,
First, that's hysterical. Second, a word of caution: Going all green, or all of any one thing, is something I'd never advocate. If you do, you do so at your own risk, as nothing in the market is ever as obvious as it seems, especially when it seems totally obvious.
While today was a mixed day, overall it was far better than it could have been. Financial stocks saw a bit of a rebound as Lehman's world didn't look like it was coming to an end. Ben Bernanke gave a speech today but showed his concerns that rising health care costs are a huge concern for the economy. The NAHB also gave a low builder sentiment reading of 18, which matches recent lows. Oil did hit a new high despite the Saudi's pledge to boost production, but that was on the dollar and it did manage to come off of highs. These are unofficial index level closing prices:
Chiquita Brands International Inc. (NYSE: CQB) was the disaster of the day as shares were down some 29% in the final minutes after this mornings warning that cost hikes were going to create a wide earnings miss.
SunPower (NASDAQ: SPWR), a manufacturer of solar systems, is recently down $3.30 to $79.70 in pre-open trading.
Calyon says: "The German solar feed-in tariff (FIT) is under fire, as lawmakers are considering an accelerated digression that would reduce rates 25% by 2010 versus 15% under current law."
SPWR over all option implied volatility of 60 is below its 26-week average of 70 according to Track Data, suggesting decreasing risk. SPWR puts are priced higher than calls because SPWR is difficult to borrow.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
SunPower (NASDAQ: SPWR) is recently up $2.56 to $96.14. Credit Suisse raised its estimates and price target to $100 from $77. SPWR June call option implied volatility is at 82, puts are at 95, above its 26-week average of 74 according to Track Data, suggesting decreasing risk. SPWR puts are priced higher than calls because SPWR is difficult to borrow.
MOST NOTEWORTHY: SunPower, Evergreen Solar and Abbott Lab were today's noteworthy initiations:
Citigroup believes SunPower (NASDAQ: SPWR) is faced with high cell production costs, its silicon cost and installation cost advantages are increasingly commoditized and finds the risk/reward even at current levels. Shares were initiated with a Hold rating and $105 target.
Citigroup believes Evergreen Solar (NASDAQ: ESLR) faces significant financing requirements over the next few years, making it difficult to see a sustained period of EPS growth beyond the $1 range. The firm sees downside to $5/share. Shares were assumed with a Sell rating and $8 target.
UBS started Abbott Lab (NYSE: ABT) with a Buy rating and $61 target. The firm is positive on Humira potential growth and expects Xience to drive vascular operating margins to positive.
Cypress Semiconductor Corporation (NYSE: CY) stock is falling this morning after an analyst at Credit Suisse downgradedSunPower Corp. (NASDAQ: SPWR), in which CY has invested, to "Neutral" from "Outperform." There are also analyst comments out there today about CY that could be hurting the stock. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CY.
After hitting a one-year low of $16.72 last January, the stock hit a one-year high of $42.79 in November. This morning, CY opened at $26.23. So far today the stock has hit a low of $24.68 and a high of $26.23. As of 11:05, CY is trading at $25.30, down $1.41 (-5.3%). The chart for CY looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a March bear-call credit spread above the $40 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 4.2% return in 2 months as long as CY is below $40 at March expiration. Cypress would have to rise by more than 21% before we would start to lose money.
CY hasn't been above $40 for more than a few day at a time in the past year and has shown resistance around $30 recently. This trade could be risky if the company's earnings next week impress investors, but even if that happens, this position could be protected by resistance CY might find around $40, where the stock topped out twice since October.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CY or SPWR.
"I can't believe I won," cried Jordin Sparks, winner of last year's American Idol. Within seconds, industry and non-industry drones alike began formulating ways to attach themselves to her in some way, crazy in anticipation of the inevitable riches.
Months later, several Wall Street types were overheard saying, "I can't believe oil keeps going higher, alternative energy stocks are going to be hot, hot, hot," and thousands of investors went wild buying shares of the dozen or so solar stocks, crazy in anticipation of the inevitable riches.
Each industry has its stars: Kelly Clarkson, Carrie Underwood and Clay Aiken -- as determined by album sales -- for American Idol, First Solar (NASDAQ: FSLR), Sunpower (NASDAQ: SPWR) and MEMC Electronic Materials (NYSE: WFR) -- as determined by stock performance -- for the solar industry.
MOST NOTEWORTHY: The restaurant sector, American Semiconductor and First Solar were today's noteworthy initiations:
Friedman Billings resumed coverage of Cheesecake Factory (NASDAQ: CAKE) and Yum! Brands (NYSE: YUM) with Outperform ratings and a $30 target and a $46 target and Applebee's (NASDAQ: APPB) with a Market Perform rating and $25.50 target.
American Superconductor (NASDAQ: AMSC) was initiated with a Buy rating and $33 target at Jefferies, as they believe repeat orders for wind turbine electrical systems could drive rapid revenue growth from 2008-2010.
CIBC resumed coverage of First Solar (NASDAQ: FSLR) with a Sector Performer rating, as they believe shares are already pricing in the company's 2009 EPS potential.
OTHER INITIATIONS:
Morgan Stanley resumed coverage of Cablevision (NYSE: CVC) with an Underweight rating.
US Steel (NYSE: X) was initiated with a Sector Performer rating and $117 target at CIBC.
JP Morgan started SunPower (NASDAQ: SPWR) with an Overweight rating and Evergreen Solar (ESLR) with a Neutral rating.
MOST NOTEWORTHY: Apollo Group, Zoran, AmSurg Corp, Apple and Tribune Co were today's noteworthy upgrades:
Baird upgraded shares of Apollo Group (NASDAQ: APOL) to Outperform from Neutral based on positive enrollment and revenue trends, margin improvement, and a strategic international announcement.
CIBC upped its rating on Zoran Corporation (NASDAQ: ZRAN) to Sector Outperformer from Sector Performer following strong Q3 results and guidance.
Jefferies upgraded shares of AmSurg Corp (NASDAQ: AMSG) to Buy from Hold as they believe the new CEO is preparing to drive earnings growth through acquisitions.
ThinkEquity continues to expect Apple (NASDAQ: AAPL) to outpace the industry in growth. The firm upgraded shares to Buy from Accumulate.
Barrington upgraded shares of Tribune Company (NYSE: TRB) to Market Perform from Underperform on valuation, as they believe the current price significantly discounts the risks of the going private transaction getting done.
This post was written by Minyanville contributor Sean Udall.
Minyanville's Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. Here he answers a reader's burning question about "green" stocks. For more original thought, visit 
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