After the closing bell last night, silicon-wafer producer MEMC Electronic Materials (NYSE: WFR) offered a mid-quarter update that's sent the shares reeling into negative territory this morning. The report started auspiciously enough, as CEO Nabeel Gareeb noted that current production rates "could allow us to achieve results in the upper half of our targeted financial range" of $560 million to $620 million in revenue.
His comment seemed to indicate that MEMC might exceed analysts' expected revenue of $596.7 million, as reported by Thomson Financial. But Gareeb then tempered his optimism by adding, "However, there is increased softness in demand from semiconductor applications customers, primarily due to their inventory reduction initiatives. These elements warrant a continued degree of caution in our outlook, given the amount of time left in the quarter."
Additionally, MEMC warned that it expects operating expenses of approximately $43 million for the third quarter, up from its previous projection of $41 million. The increase is largely attributable to one-time, non-cash severance-related expenses.
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.
Everyone is talking about solar. Whether you believe that solar energy will somehow displace an oil-driven economy or not (I don't), some of these stocks like First Solar (NASDAQ: FSLR) and JA Solar (NASDAQ: JASO) have seen big gains over the past few years.
The success of solar companies has not been lost on ETF firms with their constant new products hitting the market. A smaller ETF firm called Claymore Securities looks to be first to the market with a solar ETF, the Claymore/MAC Global Solar Energy Index ETF, with an aptly-named ticker, (NYSE: TAN).
A joint effort to make solar systems more affordable for consumers was announced recently by SolarCity and banking giant Morgan Stanley (NYSE: MS).
According to a report by Justin Moresco on RedHerring.com, the financing program is an attempt to jump start the conversion of homes to solar usage by providing financing incentives that will lower solar installation costs to consumers. The financing incentive program is called SolarLease, and it will undergo a test run in California.
The Red Herring article indicates that the program may enable consumers to have solar systems installed with an initial payment as low as 10 percent of the total installation cost. It is then expected that the money consumers save on their utility bills by going solar will cover the monthly lease payments for the installed solar equipment.
The article does not indicate whether consumers will eventually own their solar systems or if the lease program is expected to be perpetual.
Investors frequently like to chase "hot stocks." While not based on fundamentals, momentum investing does sometimes work as stocks that are "working today" frequently "work tomorrow" as well.
So, as 2008 is 1/6th done, it's time to look back at the highfliers from 2007 and see where they're trading today. As usual, the analysts at Bespoke Investment Group have some good data and charts for us.
In a post, titled "How the Best Have Done," Bespoke analyzes the best performing U.S. stocks of 2007 and tracks them into 2008. The results:
While some solar stocks are down big in 2008 after a huge run-up in 2007, the big winners are heavily concentrated in materials, agriculture, and energy. BPZ Resources Inc. (AMEX: BZP) is the stock on the list that has done the best in 2008 -- rising another 44% so far this year.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
The choppy, consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case. One growth company worth reviewing is Energy Conversion Devices (NASDAQ: ENER) . (Please note at the outset that Energy Conversion Devices is only for investors who can tolerate high risk.)
Energy Conversion Devices invents, designs, develops and commercializes materials, products and production processes for the alternative energy generation, energy storage and information technology markets.
Analysts expect F2008 revenue to more than double, with solar capacity increasing to 148 megawatts by the end of F2008, and to 200 megawatts by the end of F2009.
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.)
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.
"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.
Financial journalism is all about breaking news. News is easily researchable and journalists feel comfortable voicing their opinions. But the truth is that most news -- no matter how fabulous a company's PR firm makes it sound -- usually means little to a company's stock (it's more about the market's expectations, something that is not very researchable).
And that's why I prefer to write about companies whose stock charts are breaking out, as I have with Mercadolibre (NASDAQ: MELI) here, Solarfun (NASDAQ: SOLF) here, INVESTools (NASDAQ: SWIM) here and TheStreet.com (NASDAQ: TSCM) here (all of which are nicely, and somewhat predictably, higher) and LDK Solar (NASDAQ: LDK) here (which, in my defense, never reached my breakout price of $77; instead it tanked, exemplifying the risks involved with buying stocks before breakouts). After all, while it's fun to learn about breaking news and new products, it's even more fun to profit from the stock market (my apologies to all financial journalists, but you guys just aren't traders)!
China Technology Development Group Corporation (NASDAQ: CTDC), a provider of renewable energy solutions and network security focusing in the solar energy business in China, surged more than 70% in afternoon trading. Last week, the company announced that it was selling non-core businesses and would focus on the principal business of solar energy. With solar energy stocks in particular having a strong day, China Technology is leading the pack.
The company is a micro cap with a market-cap of $65 million, and until today was trading over 50% off its 52-week high. The company also sports a tiny float, which makes today's surge more plausible. After all, if there is not much stock to be had, and investors want to buy, the price will shoot up.
But what about the company? It has changed focus completely, moving into a business that I have my doubts about. Interesting to note that if you look at the chart, this is not the first time we have seen this stock put on a major move, but it has tended to be followed by a sustained downward trend.
Be careful about jumping on this bandwagon.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 12/26/07
Maybe they're right, but it's funny that these analysts have held onto their bearish positions even as the stock has surged from $30 to $68 in less than a month (shows you what analysts know)! Analysts like their cushy jobs, so they can't go out on a limb and say something like, "Wait a minute, this latest surge really just makes up for the crash that was caused by investigation concerns. Now that that's cleared up, maybe this one's got more in the tank -- especially considering that while LDK was tied down all throughout October, November and the first half of December, other solar plays like First Solar (NASDAQ: FSLR), Evergreen Solar (NASDAQ: ESLR), Suntech Power (NYSE: STP), Sunpower (NASDAQ: SPWR) and Solarfun (NASDAQ: SOLF) have all doubled and more."
The Israeli Cabinet is set to vote today on a radical initiative set forth by Shai Agassi, the demigod-hero of many Israeli entrepreneurs, to revolutionize the Israeli transportation infrastructure. The proposal calls for the creation of "an entire electrically powered system for cars, starting with solar energy, non-polluting electric vehicles and infrastructure to charge the cars -- all without dependence on oil."
Agassi's meteoric rise from the halls of the Israeli-M.I.T., Technion University, to the board rooms of global software conglomerate, SAP (NYSE: SAP), has been an inspirational story to a country chock-full of entrepreneurs. Agassi founded TopTier Software (originally called Quicksoft Development) in Israel in 1992. SAP acquired Agassi's company in April 2001 and Agassi was tapped for responsibility over the strategy of the Enterprise Resource Planning (ERP) software leader. Agassi recently left SAP to strike out on his own.
According to the Ha'aretz article, the cabinet's blessing will mean tax breaks, among other positives. Purchase tax on standard gasoline and diesel vehicles is 84%, which will drop to 79% on January 1. For more environmentally friendly hybrids the rate is only 30%, according to the article.
TheStreet.com's Jim Cramer explains why the unique dynamic of oil as a commodity gives alternative fuels a "magic" price point.
Boy, that ethanol is cheap. It's cheap if we use corn, and it is even cheaper if we use soy. It doesn't matter how much it costs or how much infrastructure is needed, it's become the low-cost gasoline even with the stupid unnecessary subsidies.
Amazing, isn't it? But that's why Monsanto (NYSE: MON) (Cramer's Take) and Bunge (NYSE: BG) (Cramer's Take) are so cheap and why all of the various "sun" stocks are inexpensive. Oil at $92, going to who knows where, is going to make all of these unnaturally natural alternatives the low-cost fuels.
There are a lot of fuels that are cheaper to produce than oil now, particularly if you read Chris Edmond's unbelievably good series out of the Middle East. It's all demand-on-fire, supply disappearing that is controlling the price. It isn't Nigerian terrorism or Iranian intransigence or Iraqi-Turk tensions.
Those are all just headline terms by writers searching for a reason to write about oil jumping. They have no choice. They can't keep writing "because supply is outstripped by demand," even though that's what is happening.
In a sense, we have a fabulous opportunity as a country to make some headway here on domestic security because of this umbrella. Even coal, which will now never amount to much given the Democrats' desire to stop global warming, becomes too viable to ignore as the rallies in Peabody Energy (NYSE: BTU) (Cramer's Take) and Arch Coal (NYSE: ACI) (Cramer's Take) show.
So, the endless moves up will continue. I have never seen a commodity that has no price at which demand tapers. So anything with a price point of $80 or less is now a go.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in stocks mentioned.
Venture capital is flowing, engineers are chomping at the bit and layman sources claim that mechanical components of the Chevy Volt are already being road tested on the streets of Detroit. General Motors (NYSE: GM) is not letting anything get in the way of its plans to place a successful electric car on the streets of America and the world by 2010. A report by RedHerring outlines the broad and powerful collection of top tier companies which are coming together to help GM bring its mission to fruition.
Two new research projects targeted towards electric car development were recently announced by General Electric (NYSE: GE) and are specifically geared towards the needs of the Chevy Volt. GE has been asked to design high density electric capacitors and hybrid drive train components in pursuit of our first generation of truly plug-in electric cars. It would seem that GM, GE and the Department of Energy are not willing to settle for an automobile with simple hybrid status. The goal would appear to be full blown electric automobiles at a price within reach of the public. Once the car is built, add the current advances in solar technology and you'll have an automobile that can be charged from a solar powered battery array at home.
With the high fuel prices over the past year, 
Everyone is talking about solar. Whether you believe that solar energy will somehow displace an oil-driven economy or not (I don't), some of these stocks like 
A joint effort to make solar systems more affordable for consumers was announced recently by 
On Monday, 
TheStreet.com's Jim Cramer explains why the unique dynamic of oil as a commodity gives alternative fuels a "magic" price point.
Venture capital is flowing, engineers are chomping at the bit and layman sources claim that mechanical components of the Chevy Volt are already being road tested on the streets of Detroit. 
John McCain, losing ground, goes for broke tonight
If nothing else, gasoline prices are falling!
Closing Bell: Dow slump puts bulls on suicide watch; BAC, MS, F, FSLR all down, AMD up
