Evergreen Solar (NYSE: ESLR) shares are trading higher today after the company announced today it has signed a sales contract with Germany's IBC Solar AG valued at $1.2 billion. Under the deal, the company will make the solar panels at a recently opened plant in Devens and at another factory expected to open in 2010. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ESLR.
After hitting a one-year high of $18.85 in December, the stock hit a one-year low of $7.52 in March. ESLR opened this morning at $10.16. So far today the stock has hit a low of $9.58 and a high of $10.22. As of 12:40, ESLR is trading at $10.11, up $0.95 (10.4%). The chart for ESLR looks bullish but deteriorating while S&P gives ESLR a very positive 5 STARS (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $7.50 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 still leverage nice returns. For this particular trade, we will make a 19.0% return in just two months as long as ESLR is above $7.50 at September expiration. Evergreen would have to fall by more than 25.7% before we would start to lose money. Learn more about this type of trade here.
With the high fuel prices over the past year, solar stocks have been making some nice gains. But there are some signs that they may not be as safe as they appear. Investors' interest in solar companies increased due to soaring crude futures, but there are some factors to take into account before investing money into solar.
The current BusinessWeeklooks at stocks such as First Solar (NASDAQ: FSLR), SolarWorld and Evergreen Solar (NASDAQ: ESLR), which have been facing increased volatility based on contract deal news or the lack thereof.
A major impact came in May, with speculation that Germany would lower subsidies given to companies and individuals who install alternative energy equipment. But the cut was not as deep as expected and stocks rebounded nicely.
Stocks were up today, but less than you might imagine after a large drop of more than $4.00 on oil in late-day prices. So much for Goldman Sachs' raising oil target again today, as well as lifting the oil services sector and upping price targets for some of the sector's stocks .
Here are today's unofficial closing bell index levels:
Evergreen Solar Inc. (NASDAQ: ESLR) was one of the huge winners today with shares up over 20% at $12.33 in today's final minutes. The company announced a huge second round contract that added significantly to its backlog.
Huntsman Corporation (NYSE: HUN) imploded after its private equity buyout was officially notified as "being killed" by the buyers, and shares were down 38% at $12.79 at the end of the day. Mark that as an all-time low.
Editor's Note: This post comes courtesy of Sean Udall, a wise player in the tech field. For more, visit www.minyanville.com.
Interesting article on Apple's (NASDAQ: AAPL) iPhone "potential" teardown. Implications are that the 3G iPhone will carry higher margins than previous model. We will see shortly and I still expect Broadcom (NASDAQ: BRCM) to benefit from the actual teardown.
Speaking of Broadcom, the company got the all clear on a patent infringement deal with SiRF Technology Holdings (NASDAQ: SIRF) and I like the emerging technical setup on BRCM.
Elsewhere, Adobe (NASDAQ: ADBE) reports today and has been a solid tech name this year, really many years for that matter. I don't expect any big surprises.
Electronic Arts (NASDAQ: ERTS) is at the William Blair growth conference. Gaming sales were reported strong again last week. This is probably a cheap solid grower but I prefer the growing online gaming model, I've discussed on the Buzz in the past.
SunPower (NASDAQ: SPWR) was upgraded this morning and presenting at an Alternative Energy conference on Wednesday. I was going to trade this again but the analyst action is spiking the stock today.
Evergreen Solar's (NASDAQ: ESLR) shareholder and analyst meetings is scheduled this week and I'm thinking this could fuel bullish action.
Regarding Comverge (NASDAQ: COMV) and EnerNOC(NASDAQ: ENOC), I overheard some bullish comments on these stocks on CNBC this morning. I've discussed COMV on the buzz previously and ENOC is their sister company. Both companies offer technology solutions for managing the power grid more efficiently and I think both stocks are cheap emerging growth stocks.
MOST NOTEWORTHY: Shanda Interactive, Evergreen Solar, SunPower and Marriott were today's noteworthy downgrades:
Citigroup downgraded shares of Shanda Interactive (NASDAQ:SNDA) to Hold from Buy following the company's lower-than-expected guidance as they see a lack of positive catalysts.
Merrill downgraded Evergreen Solar (NASDAQ:ESLR) and SunPower (NASDAQ:SPWR) to Sell from Neutral citing a potential reduction in German tariffs.
Morgan Stanley downgraded Marriott (NYSE:MAR) to Equal Weight from Overweight citing economic pressures on business travel.
OTHER DOWNGRADES:
Vivus (NASDAQ:VVUS) was downgraded at Wachovia to Market Perform from Outperform.
UBS lowered Juniper(NASDAQ:JNPR) to Neutral from Buy.
Cemex (NYSE:CX) was downgraded to Neutral from Overweight at JP Morgan.
MOST NOTEWORTHY: Evergreen Solar, Myriad Genetics and Columbia Laboratories were today's noteworthy initiations:
Kaufman Bros. believes Evergreen Solar (NASDAQ: ESLR) is well-positioned to take advantage of a decline in raw material costs because it makes its own wafers on its own equipment. The firm started shares with a Buy rating and $18 target.
Myriad Genetics (NASDAQ: MYGN) was initiated at RBC Capital with an Underperform rating and $37 target and expects negative Phase III results for Flurizan when data is presented in June.
Caris believes Columbia Laboratories (NASDAQ: CBRX) has two potential high value treatments, one to prevent preterm birth and the other to treat primary dysmenorrhea. Shares were initiated with a Buy rating and $11 target.
OTHER INITIATIONS:
McDermott (NYSE: MDR) was initiated with a Buy rating and $70 target at KeyBanc.
Morgan Stanley assumed Canon (NYSE: CAJ) with an Overweight rating.
Polaris Industries (NYSE: PII) was initiated at William Blair with a Market Perform rating.
Evergreen Solar (NASDAQ: ESLR) develops, manufactures and markets solar power products. Its proprietary String Ribbon technology process is used to make photovoltaic cells that convert sunlight into electricity. These are the primary components of solar panels used to power such systems as highway call boxes, microwave stations, billboard lighting mechanisms and rural electric power sources. Most of the firm's sales involve customers in the United States.
Evergreen had good news for investors late last week. German-based Ralos Vertriebs GmbH signed a $750 million contract for solar panel deliveries, beginning in 2008 and extending through 2013. That boosted the company's sales total over the past two weeks to about $1 billion. Lazard subsequently issued positive comments on the stock, noting enhanced visibility.
MOST NOTEWORTHY: Staples, Evergreen Solar and Genzyme were today's noteworthy upgrades:
Jefferies upgraded shares of Staples (NASDAQ: SPLS) to Buy from Hold following the company's raised bid for Corporate Express based on the increased chance the deal gets deal done and SPLS achieves meaningful EPS accretion.
Jefferies also raised Evergreen Solar (NASDAQ: ESLR) to Buy from Hold on valuation, as they believe concerns regarding capital needs are now priced into the stock and that the company continues to take risk out of its growth story through execution.
Bernstein upgraded Genzyme (NASDAQ: GENZ) to Outperform from Market Perform citing increased confidence in GENZ's product portfolio, geographic and therapeutic diversification, improved outlook, and valuation.
OTHER UPGRADES:
Sun Microsystems (NASDAQ: JAVA) was raised to Outperform from Market Perform at Wachovia.
BearingPoint (NYSE: BE) was upgraded at Goldman to Neutral from Sell.
Lehman upgraded Nexen (NYSE: NXY) to Overweight from Equal Weight.
Despite a lower "trade deficit" number, investors have been taking profits. Seeing oil go over $126.00 hurt more than a horrible turnout in financials. Below are the unofficial closing levels:
American International Group, Inc. (NYSE: AIG) fell over 8% to $40.26 after reporting huge losses and disclosing that would raise $12.5 Billion in capital.
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.
Evergreen Solar Inc. (NASDAQ: ESLR) shares are trading higher after the company announced it has started an expansion project to double the capacity of its Devens, Mass., plant to 160 megawatts by the end of next year. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ESLR.
After hitting a one-year high of $18.85 in December, the stock hit a one-year low of $7.52 in March. ESLR opened this morning at $11.66. So far today the stock has hit a low of $11.10 and a high of $11.97. As of 12:30, ESLR is trading at $11.27, up $0.57 (5.3%). The chart for ESLR is bearish but improving, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $7.50 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 still leverage nice returns. For this particular trade, we will make a 16.3% return in just five and a half months as long as ESLR is above $7.50 at September expiration. Evergreen would have to fall by more than 33% before we would start to lose money.
ESLR hasn't been below $7.50 at all in the past year and has shown support around $9 recently. This trade could be risky if the prices for oil and other energies fall off some in the coming months, but even if that happens, that position could be protected by support the stock might find just above $7.50, where it bottomed out in the past month.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in ESLR.
Evergreen Solar (NYSE: ESLR) shares are trading higher today after the company announced today it has signed a sales contract with Germany's IBC Solar AG valued at $1.2 billion. Under the deal, the company will make the solar panels at a recently opened plant in Devens and at another factory expected to open in 2010. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ESLR.
With the high fuel prices over the past year, 
Editor's Note: This post comes courtesy of Sean Udall, a wise player in the tech field. For more, visit .gif){kind=logo}
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