24/7 Wall St. » ENER

More Short Covering Exaggerates Solar Rallies (TAN, FSLR, SPWR, ENER, TSL, WFR)

Administrator — Thu, 09 Feb 2012 20:10:07 +0000

Solar stocks are on fire. Still, they are so far down from a year ago that celebrating the move it difficult to do. To show just how powerful this move up and down and up has been, look no further than the solar ETF via the Guggenheim Solar ETF (NYSE: TAN). This ETS is up 10% today and the move has been now almost 60% from the lows of December 28. Still, the $3.83 price compares to a year ago high of over $9.00 and it is down from over $11.00 at the start of 2010.

Many solar stocks are likely experiencing rapid short covering. Sticking around for the lowest prices after serious success is a sucker’s game. There may also be a political angle here now that President Obama’s poll numbers are looking a bit better. The problem is that it is going to take more now than a President with a continued favorable stance to alternative energy. The fundamentals remain weak and now investors are getting to evaluate whether there is any value of if they are value traps. Take a look at some of the moves…

First Solar, Inc. (NASDAQ: FSLR) is up 7.5% at $49.29 against a 52-week range of $42.50 to $175.45. The most recent short interest data showed that the short interest was 18 million shares and that was actually down from most reports in the fourth quarter of 2011

SunPower Corporation (NASDAQ: SPWR) is up over 13% at $8.53 today against a 52-week range of $4.94 to $23.36. The most recent short interest data showed that the short interest was 5.7 million shares, down from a November peak of 9.3 million shares and much lower than the 11.7 million shares short back at the end of June.

Energy Conversion Devices, Inc. (NASDAQ: ENER) is even up 12% to $1.29 and no longer at much of a delisting risk. Its 52-week range is $0.20 to $4.29. The most recent short interest data showed that the short interest was 11.4 million shares at the lowest levels in a year since it had become a penny stock.

Trina Solar Limited (NYSE: TSL), out of China, is up a whopping 24% at $11.44 against a 52-week range of $5.28 to $31.08. That makes for a gain of 70% so far in 2011 and it would have to almost rise 200% to challenge its year-high. The most recent short interest data showed that the short interest was 15.5 million shares.

MEMC Electronic Materials, Inc. (NYSE: WFR) is also up 8% at $5.78 against a 52-week range of $3.65 to $15.04. That gives a gain of almost 47% so far in 2012. The most recent short interest data showed that the short interest was 14.5 million shares and that was actually higher than at the end of 2011 even if it is lower than prior months.

JON C. OGG

Filed under: 24/7 Wall St. Wire, ADR, Alternative Energy, Green Biz, Short Interest, Trading Alert Tagged: ENER, FSLR, SPWR, TAN, TSL, WFR

Solar Tries For Significant 2012 Comeback (FSLR, WFR, TAN, KWT, SPWR, STP, YGE, LDK, ENER, XLU)

Administrator — Wed, 11 Jan 2012 18:12:55 +0000

So far we are seeing a continued rotation. What worked great in 2011 is being sold and the worst performing groups are being bought. No sector with as many names in it took it on the chin as much as the solar sector last year. Despite many headwinds and fears of a recession, Germany could end up being the saving grace for solar power this year by sucking up the excess supply of PV panels.

Solar makers are trying to stage a recovery. First Solar, Inc. (NASDAQ: FSLR) is the leader of the pack in quality and operations and its shares are up about 9% at $42.30 versus a 52-week trading range of $29.87 to $175.45. Even more impressive is the move in shares of MEMC Electronic Materials Inc. (NYSE: WFR) with a 17% gain to $4.58 versus a 52-week range of $3.65 to $15.04. Even the Guggenheim Solar (NYSE: TAN) ETF and the Market Vectors Solar Energy ETF (NYSE: KWT) are surging. We are paying close attention to SunPower Corporation (NASDAQ: SPWR), Suntech Power Holdings Co. Ltd. (NYSE: STP), Yingli Green Energy Holdings Co. Ltd. (NYSE: YGE), LDK Solar Co. Ltd. (NYSE: LDK), Energy Conversion Devices, Inc. (NASDAQ: ENER) and others as well. Here are the other movers with relative prices to their 52-week highs:

SunPower Corporation (NASDAQ: SPWR) is up 9.5% at $7.33, down from a year high of $23.36;
Suntech Power Holdings Co. Ltd. (NYSE: STP) is up a whopping 25% at $3.22 versus a year high of $10.83;
Yingli Green Energy Holdings Co. Ltd. (NYSE: YGE) is up 17% at $4.85 versus a year high of $13.59;
LDK Solar Co. Ltd. (NYSE: LDK) is up 11.3% at $5.21 against a high of $14.97 in the last year, although it is easy to stick by the guns that LDK is mathematically bankrupt without the coverage of the Chinese government.
Energy Conversion Devices, Inc. (NASDAQ: ENER) is up 23% at $0.38 against a high of $4.80 but this is one still is unlikely to survive 2012.

In the world of ETFs, these are running as well: Guggenheim Solar (NYSE: TAN) is up 10.5% at $2.95 versus a high of $9.16 and Market Vectors Solar Energy ETF (NYSE: KWT) is up 11.5% at $4.45. The more diversified alt-energy ETF of PowerShares WilderHill Clean Energy (NYSE: PBW) is up less than all of these with gains of 4.8% at $5.65.

Before getting too euphoric keep in mind that this is not unusual at the start of a year or new period where sector rotation favors the most beaten up sector. Besides that, there is always the political angle on the solar sector that is front and center in the elections this year.

What we do know within reason is simple: solar PV unit prices cannot drop by another 50% or so in 2012. If pricing has bottomed, perhaps these value traps may get to migrate to value stocks after all. We still expect margin pressure, austerity, and a lack of the ability to pay dividends to all equal concerns of PV panel dumping by Chinese firms leading to a virtual race toward zero.

If you want to know just how big this news is, the S&P Utility Sector was the best performing sector in all of 2011 and its gains were not quite 15%. To prove the point, the Utilities Select Sector SPDR (NYSE: XLU) ETF rose by 19% in 2011 if you adjust for the dividend payments as so many utilities offer investors dividend yields of 4% and higher.

JON C. OGG

Filed under: Alternative Energy, ETF, Green Biz, Utilities Tagged: ENER, FSLR, KWT, LDK, SPWR, STP, TAN, WFR, XLU, YGE

Ten Stocks Unlikely To Survive 2012 (ALIM, AMR, APP, EK, ENER, FFN, NRTLQ, PNCL, RDDY, YRCWD)

Administrator — Fri, 30 Dec 2011 13:15:59 +0000

Calling on the death of a company is no fun task. Some companies cannot get it right and it is amazing how some companies can hold on to a status as a public company. 24/7 Wall St. has compiled a list of ten stocks which may disappear in 2012. Some will likely avoid the hangman, while others seem doomed.

The list includes the following still-public stocks: Alimera Sciences, Inc. (NASDAQ: ALIM); AMR Corporation (NYSE: AMR); American Apparel, Inc. (AMEX: APP); Eastman Kodak Co. (NYSE: EK); Energy Conversion Devices, Inc. (NASDAQ: ENER); FriendFinder Networks, Inc. (NASDAQ: FFN); Nortel Networks Corp. (NRTLQ); Pinnacle Airlines Corp. (NASDAQ: PNCL); Reddy Ice Holdings, Inc. (RDDY); YRC Worldwide Inc. (NASDAQ: YRCWD).

Almost all of these have either had a form of bankruptcy or reorganization, while others have been in the rumor mill for quite some time. We included a write-up on each, and have even have gone as far as discussing some caveats which could help some of these stocks to survive. There is even a chance that a couple of these could end up being major turnaround stocks.

Alimera Sciences, Inc. (NASDAQ: ALIM) saw a share price implosion take place in November after the FDA all but rejected its eye drug. We covered this one at BioHealthInvestor with a near 75% drop on the news after being public less than two years. Shares fell to $1.96 with a $61 million market cap and shares are now at $1.30 with a $41 million market cap. The good news is that it has no debt overhang and it may be able to scrap operating costs down to nothing. Still, we cannot see how it can fund itself through another set of trials. Mathematically it is more than financially challenged, even if the company manages to hang on as a NASDAQ listing.

AMR Corporation (NYSE: AMR) is effectively done already. We had been expecting an NYSE delisting notice to come for a while, even though there was a time even in the last week of the year where shares gapped up big and traded as though there may be some intrinsic post-bankruptcy value left for common shareholders. That would not be the normal post-bankruptcy value. While anything is possible, this one will move to the pink sheets and will trade around with a 5-ticker symbol for a while.

American Apparel, Inc. (AMEX: APP) has so far managed to avoid being delisted and so far managed to avoid a bankruptcy through a shaky history. Still, things have been sketchy here for so long that even a near-40% jump in shares from $0.57 to $0.75 since its early December business update showed improving store sales metrics. This company has managed to survive on less than $10 million in cash but still has a net tangible value of $56 million despite a loss in 2010 of $86 million. Here is the caveat” American Apparel has managed to exist in this diminished state for some time and its controversial CEO has managed to hang on. Maybe the company can pull a rabbit out of a hat and turnaround. American Apparel often notes “going concern” as a risk under its safe harbor statements in press releases.

Eastman Kodak Co. (NYSE: EK) has done everything wrong and had everything go wrong that could go wrong. Antonio Perez has been on our list of CEOs that need to be fired for years now and the company has stuck its head in the sand for far too long. The bankruptcy rumors have swirled for long enough. The real value left in the company is in the patents, but the company has not been able to make its patent machine turn into a survival machine. The KKR board members have also resigned and that could be a sign that the private equity firm will try to force a move here so it can secure whatever value is left. At the end of September when we polled our readers, the poll response was that Kodak was more likely to go bankrupt than Greece. Ouch.

Filed under: Accounting, Bankruptcy, Corporate Governance, Cult Stock, Editor's Picks, Mergers and Buy Outs, Personal Finance, Restatements, Rumors, Shareholder Issues, Turnarounds Tagged: ALIM, AMR, APP, EK, ENER, FFN, NRTLQ, PNCL, RDDY, YRCWD

24/7 Wall St. Closing Bell (DWA, HRB, PCLN, RAD, WAG, ADSK, GM, AONE, IL, NILE, HNR, NP, ENER, PRTS, ORLY, AMSC, NOR, C, BZH)

Paul Ausick — Wed, 09 Nov 2011 21:07:49 +0000

Pre-market signals were weak today, and once trading opened, the signals got stronger. The DJIA has traded down more than -200 points for most of the day, with financial and energy stocks the hardest hit. Rates on Italian bonds topped 7% this morning, sending traders running away from equities and commodities alike. The only gainer for the day appears to be the dollar, which is stronger against the euro and the yen in the mid-afternoon. Crude prices fell below $95/barrel before recovering to near $98/barrel, and gold is down at $1,789.30. About an hour before closing, nearly 99% of the S&P 500 stocks were down on the day.

The unofficial closing bells put the DJIA down more than -389 points to 11,780.94 (-3.2%), the NASDAQ fell nearly -106 points (-3.88%) to 2,621.65, and the S&P 500 fell -3.67% or nearly -47 points to 1,229.10.

There were several analyst upgrades and downgrades today, including DreamWorks Animation SKG Inc. (NYSE: DWA) cut to ‘sell’ at Janney; H&R Block, Inc. (NYSE: HRB) raised to ‘outperform’ at Oppenheimer; Priceline.com Inc. (NASDAQ: PCLN) cut to ‘hold’ at S&P Capital IQ; Rite Aid Corporation (NYSE: RAD) raised to ‘outperform’ at Credit Suisse; Walgreen Co. (NYSE: WAG) cut to ‘neutral’ at Credit Suisse; and Autodesk Inc. (NASDAQ: ADSK) cut to ‘neutral’ at BofA/ML.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: General Motors Co. (NYSE: GM) is up down about -10%, at $22.48; A123 Systems Inc. (NASDAQ: AONE) is down less than -1%, at $3.09; IntraLinks Holdings, Inc. (NYSE: IL) is down more than -37%, at $5.50, after posting a new 52-week low of $5.44 earlier today; Blue Nile Inc. (NASDAQ: NILE) is down nearly -16%, at $33.24; Harvest Natural Resources Inc. (NYSE: HNR) is down more than -19%, at $8.80; and Neenah Paper, Inc. (NYSE: NP) is up more than 12%, at $18.84.

Several other standouts from today are as follows…

Energy Conversion Devices, Inc. (NASDAQ: ENER) is down more than -32%, to $0.41. The company has said that it will suspend manufacturing and cut 500 jobs. Excess inventory of solar panels gets the blame.

U.S. Auto Parts Network, Inc. (NASDAQ: PRTS) is down more than -22%, at $3.94, after posting a new 52-week low of $3.66 earlier in the day. The company received a waiver from one of its lenders for failing to meet coverage ratio requirements.

O’Reilly Automotive, Inc. (NASDAQ: ORLY) is down about -1.1%, at $76.44, after posting a new 52-week high of $77.95 earlier today. We noted the company’s performance earlier today in an article on auto sector implied gains.

American Superconductor Corp. (NASDAQ: AMSC)) is up nearly 10%, to $4.49. The company reported earnings today, and its growing order backlog indicates a possible turnaround following the loss of its biggest customer earlier this year.

Noranda Aluminum Holding Corp. (NYSE: NOR) is down more than -16%, at $8.51. The company will pay a special dividend of $1/share to shareholders of record as of yesterday’s close. That pushed the shares down a buck this morning, and the rest is due to the overall market decline today.

Citigroup (NYSE: C) is down more than -8%, at $28.78. The bank claimed the largest decline among the big US banks today.

Beazer Homes USA Inc. (NYSE: BZH) is down nearly -8%, at $2.17. There was no special news from Beazer today, but the threatened burst of new foreclosures soon to hit the housing market have had a nasty effect on this lower-priced builder.

Stay tuned for Thursday. Atlanta Federal Reserve Bank president Dennis Lockhart is giving a speech in the morning and Federal Reserve chairman Ben Bernanke will hold a town hall meeting with soldiers and their families at Fort Bliss, Texas, at 11:45 a.m. We have noted the following events (all times Eastern):

8:30 a.m. – International trade balance report
8:30 a.m. – Initial unemployment benefits claims
8:30 a.m. – Monthly import/export price report
9:45 a.m. – Bloomberg consumer comfort index
10:30 a.m. – EIA natural gas inventory report
2:00 p.m. – Monthly US Treasury budget report
4:30 p.m. – Federal Reserve balance sheet and money supply report

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: ADSK, AMSC, AONE, BZH, C, DWA, ENER, GM, HNR, HRB, IL, NILE, NOR, NP, ORLY, PCLN, PRTS, RAD, WAG

Short Seller Swarm: Highest Days To Cover (CADX, DMND, TSLA, OMEX, PACR, MNKD, WAVX, ENER, NTRI, ZIXI, MR, ZZ, RCI, MNI, HGG, AM, BPI, LTM)

Administrator — Tue, 27 Sep 2011 15:13:51 +0000

Many investors track the largest increase in short selling, but there is another crucial way to look at short interest: the days to cover often tells just how actively shorted a stock is, as does a large percentage of its float. More importantly, these often represent a longer-term bias by the trading community. We have tracked the NASDAQ and NYSE short interest data today to screen for companies with the highest days to cover ratios (all are over one months of trading volume). We also looked for a high percentage of its shares outstanding or its float to be in the short interest. Almost all of these also had an increase in the period from August 31 to September 15 settlement dates.

The NASDAQ stocks which fit this bill are as follows: Cadence Pharmaceuticals, Inc. (NASDAQ: CADX); Diamond Foods, Inc. (NASDAQ: DMND); Tesla Motors, Inc. (NASDAQ: TSLA); Odyssey Marine Exploration, Inc. (NASDAQ: OMEX); Pacer International, Inc. (NASDAQ: PACR); MannKind Corporation (NASDAQ: MNKD); Wave Systems Corporation (NASDAQ: WAVX); Energy Conversion Devices, Inc. (NASDAQ: ENER); NutriSystem Inc. (NASDAQ: NTRI); and Zix Corporation (NASDAQ: ZIXI).

The NYSE stocks which fit this bill, except for one, are as follows: Mindray Medical International (NYSE: MR); Sealy Corporation (NYSE: ZZ); Rogers Communication, Inc. (NYSE: RCI); The McClatchy Company (NYSE: MNI); HHGregg, Inc. (NYSE: HGG); American Greetings Corporation (NYSE: AM); Bridgepoint Education, Inc. (NYSE: BPI); and Life Time Fitness (NYSE: LTM).

We only looked at companies with an average volume of more than 250,000 shares and have added some loose color on these if applicable.

Filed under: Short Interest, Trading Alert Tagged: AM, BPI, CADX, DMND, ENER, HGG, LTM, MNI, MNKD, MR, NTRI, OMEX, PACR, RCI, TSLA, WAVX, ZIXI, ZZ

Short Seller Moves in Alt Energy Stocks (FSLR, SPWRA, ENER, LDK, TSL, TSLA, RBCN, VECO, CREE, CPST, AMAT, GTAT)

Administrator — Tue, 27 Sep 2011 12:33:38 +0000

In the wake of the weak global economic news, some alternative energy stocks are being swept along in the current of bad news, while a few others are making a bit of a comeback. Overall, though, short interest in these alt energy stocks remains quite high.

In the solar sector, short interest in First Solar Inc. (NASDAQ: FSLR) rose by 10.5% in the week ending August 31st, to 18.85 million shares, or nearly 32% of the stock’s float. Short interest in SunPower Corp. (NASDAQ: SPWRA) fell by -4.1%, to 7.22 million shares, or 28% of the stock’s float. Short interest in Energy Conversion Devices, Inc. (NASDAQ: ENER) rose slightly, 0.6%, to 14.31 million shares, or 25% of the stock’s float. Short interest in LDK Solar Co. Inc. (NYSE: LDK) fell by -20%, to 29.28 million shares. LDK’s days to cover is 11. Short interest in Trina Solar Ltd. (NYSE: TSL) rose 23.8%, to 20.54 million shares and days to cover is 5.

Among the leaders in short interest is Tesla Motors, Inc., with 22.9 million shares short, or 43% of the float. Days to cover Tesla stock is a very high 31.

The LED lighting sector has also attracted short attention. Short interest in Rubicon Technology Inc. (NASDAQ: RBCN) fell -2.5%, to 5.46 million shares, but that’s still more than 31% of the float held by shorts. Days to cover is 14. Short interest in Cree Inc. (NASDAQ: CREE) rose 9.2%, to 20.58 million shares, 19.3% of the company’s float. Short interest in Veeco Instruments Inc. (NASDAQ: VECO) fell by -7.7%, to 10.96 million shares, or 27% of the stock’s float.

Turbine maker Capstone Turbine Corp. (NASDAQ) saw short interest rise by just 0.7%, to 42.48 million shares, or 16.5% of float. Days to cover is 18.

Semiconductor equipment makers Applied Materials, Inc. (NASDAQ: AMAT) and GT Advanced Technologies, Inc. (NASDAQ: GTAT) both saw drops in short interest. Applied’s short interest fell to 23 million shares, just 1.8% of its float. GT’s short interest fell to 22.23 million shares, which is 18% of the stock’s float. GT’s days to cover is 18.

Data from Nasdaq and NYSE.

Paul Ausick

Filed under: Alternative Energy, Green Biz, Short Interest Tagged: AMAT, CPST, CREE, ENER, FSLR, GTAT, LDK, RBCN, SPWRA, TSL, TSLA, VECO

Top Earnings Previews For The Week Ahead (FMCN, COCO, HNZ, TSL, WSM, AEO, AMAT, GES, TOL, ENER, KKD, OVTI, P)

Administrator — Fri, 19 Aug 2011 17:30:15 +0000

Earnings season has mostly wound down as far as the big market movers but there are still many companies dribbling out earnings reports. This coming week we have many companies that still matter which are due to release earnings and we would expect that these could be the big movers next week.

The top reports for the coming week are as follows: Focus Media Holding Ltd. (NASDAQ: FMCN); Corinthian Colleges Inc. (NASDAQ: COCO); H J Heinz Co. (NYSE: HNZ); Trina Solar Ltd. (NYSE: TSL); Williams Sonoma Inc. (NYSE: WSM); American Eagle Outfitters Inc. (NYSE: AEO); Applied Materials Inc. (NASDAQ: AMAT); Guess Inc. (NYSE: GES); Toll Brothers Inc. (NYSE: TOL); Energy Conversion Devices Inc. (NASDAQ: ENER); Krispy Kreme Doughnuts Inc. (NYSE: KKD); Omnivision Technologies Inc. (NASDAQ: OVTI); and Pandora Media Inc. (NYSE: P).

We have compiled previews using Thomson Reuters estimates, shown price data on each and added color if applicable.

Monday, August 22

Focus Media Holding Ltd. (NASDAQ: FMCN) has estimates of $0.37 EPS and $162.7 million in revenues; next quarter estimates are $0.43 EPS and $174 million in revenues. Shares are trading around $28.02 and the 52-week trading range is $17.71 to $37.58. So far, Focus has managed to avoid the China bashing trades because it is more established and investors believe that it is one of the real-deal companies. Valuations still remain high but that is because growth expectations remain here for the long-term.

Tuesday, August 23

Corinthian Colleges Inc. (NASDAQ: COCO) has estimates of $0.11 EPS and $427.6 million in revenues; next quarter estimates are $0.15 EPS and $427.02 million in revenues. Shares are trading around $2.36 and the 52-week trading range is $2.315 (hit on Friday) to $7,35. Just another down and out education stock.

H J Heinz Co. (NYSE: HNZ) has estimates of $0.76 EPS and $2.78 billion in revenues; next quarter estimates are $0.85 EPS and $2.89 billion in revenues. Shares are trading around $52.20 and the 52-week trading range is $45.52 to $55.00.

Trina Solar Ltd. (NYSE: TSL) has estimates of $0.47 EPS and $599.44 million in revenues; next quarter estimates are $0.60 EPS and $644.43 million in revenues. Shares are trading around $13.75 and the 52-week trading range is $12.75 (hit Friday) to $31.89. What can the solar sector look forward to right now?

Williams Sonoma Inc. (NYSE: WSM) has estimates of $0.36 EPS and $823.97 million in revenues; next quarter estimates are $0.39 EPS and $861.24 million in revenues. Shares are trading around $28.90 and the 52-week trading range is $24.57 to $45.48. It has been impossible to not notice the sell-off here in this cyclical retailer that does less-good in had times and scores in boom-times. The stock has suffered handily since July when Goldman Sachs raised its ratings in a solid outlook call.

Filed under: Calendar, Earnings, The Week Tagged: AEO, AMAT, COCO, ENER, FMCN, GES, HNZ, KKD, OVTI, P, TOL, TSL, WSM

First Solar, The Ultimate Sector Solar Drag Rather Than Savior (FSLR, WFR, SOLR, JASO, JKS, LDK, TSL, STP, YGE, SPWRA, TOT, ESLR, ENER, ASTI, TAN)

Administrator — Fri, 05 Aug 2011 14:40:07 +0000

Three major solar PV companies reported earnings after markets closed yesterday, and the final score does not look promising for the solar PV makers. First Solar Inc. (NASDAQ: FSLR) and MEMC Electronic Materials Inc. (NYSE: WFR) lowered guidance, while GT Solar International, Inc. (NASDAQ: SOLR) posted better-than-expected profits and a record backlog of orders.

There was no good news for Chinese solar makers either, even given news earlier in the week of the government’s adoption of a higher feed-in tariff for solar generation. JA Solar Holdings Co., Ltd. (NASDAQ: JASO), JinkoSolar Holding Co., Ltd. (NYSE: JKS), LDK Solar Co., Ltd. (NYSE: LDK), Trina Solar Ltd. (NYSE: TSL), Suntech Power Holdings Co. Ltd. (NYSE: STP), and Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) all finished lower yesterday and are all anywhere between -16% and -33% lower for the past month.

The major issues in the solar PV market were identified at least a year ago, but the reality is perhaps worse than anticipated. Massive expansion in production capacity coupled with reduced incentives in Europe have driven margins into the cellar. First Solar reported EPS of $0.70, considerably below EPS expectations of $0.92, and revenue totaled $533 million, well below estimates of $582 million.

And among US solar PV providers, First Solar is perhaps the best. SunPower Corp. (NASDAQ: SPWRA) is trading about-20% below its price of one year ago, even following a massive investment by Total SA (NYSE: TOT). Other US solar PV makers, Evergreen Solar, Inc. (NASDAQ: ESLR), Energy Conversion Devices Inc. (NASDAQ: ENER) and Ascent Solar Technology, Inc. (NASDAQ: ASTI), are all trading below $1/share and are no more than marginal players any longer.

GT Solar, and to some degree MEMC, have the advantage of not producing solar modules and panels. GT Solar’s share price has risen around 50% in the past year on the strength of orders for its solar PV manufacturing equipment. That won’t last forever, but it looks good now. MEMC is holding its own on wafer production and sales, but the glut of solar panels will chip away at this stock over the next few months.

The solar sector has gone from being a growth area to something less than even a value play. The enormous increase in manufacturing capacity that is taking place this year will take several years to stabilize with demand, which is driven more by government policy and incentives than anything else.

Some of the weaker US and Chinese players are destined either to be acquired or to just fade away. In the US, First Solar and SunPower look to be the only long-term survivors. In China, it’s anyone’s guess because so much depends on influence and connections with the government and with government-controlled banks. The recent accounting issues with Chinese solar companies will continue to be a weight unless and until the government brings accounting practices more in line with more widely accepted standards.

First Solar shares are down about -2.5% in the first hour of trading this morning, to $105.26, after setting a new 52-week low earlier, and the shares now trade in a 52-week range of $103.82-$175.45. If First Solar can avoid falling below $100/share today, that will be a victory. The Guggenheim Solar ETF (NYSE: TAN) is down about -1.75%, at $5.65, after posting a new 52-week low earlier this morning of $5.60.

Among the Chinese companies, JA Solar has put up a new 52-week low of $4.05 this morning, before recovering slightly to $4.09, down about -3.5%, with a new range of $4.05-$10.24. JinkoSolar is off more than -10%, to $17.75, in a 52-week range of $17.30-$41.75. LDK Solar is essentially flat, at $6.00, in a 52-week range of $5.69-$15.10.

MEMC is also down more than -3%, having posted a new 52-week low of $5.82, against a 52-week high of $15.04. Only GT Solar is showing some positive news, up more than 2%, at $12.07, in a 52-week range of $6.65-$17.50.

Paul Ausick

Filed under: ADR, Alternative Energy, Earnings, Earnings Warning, Economy, Green Biz, Utilities Tagged: ASTI, ENER, ESLR, FSLR, JASO, JKS, LDK, SOLR, SPWRA, STP, TAN, TOT, TSL, WFR, YGE

The Solar Consolidation Phase May Just Be Starting (JASO, LDK, JKS, SPWRA, TOT, RSOL, WFR, FSLR, ESLR, ENER, TAN)

Administrator — Fri, 01 Jul 2011 14:38:09 +0000

The merger and consolidation phase in solar may be getting underway. Solar PV maker JA Solar Holdings, Co., Ltd. (NASDAQ: JASO) has reached an agreement to purchase privately held Silver Age Holdings Ltd., a company controlled by JA Solar’s chairman, and that owns Solar Silicon Valley Electronic Science and Technology Co., Ltd., a wafer maker with production facilities in China. JA Solar will issue about 31 million new shares at $5.825/share, a premium of just 5% above JA Solar’s closing price yesterday.

The deal follows a recent host of share buybacks and other acquisitions in the solar PV space. Earlier this week LDK Solar Co. Inc. (NYSE: LDK) announced $110 million share repurchase plan. JinkoSolar Holding Co. Ltd. (NYSE: JKS) authorized a $30 million share repurchase plan in May, while the biggest deal was the acquisition of a controlling interest in SunPower Corp. (NASDAQ: SPWRA) by Total SA (NYSE: TOT) for nearly $1.4 billion. Real Goods Solar, Inc. (NASDAQ: RSOL), a solar PV installer, based in Colorado, acquired privately held Alteris Renewables Inc., a Connecticut-based installer, for around $20 million. Don’t think for a second that these are just one-off deals.

In 2010 downstream acquisitions were all the rage. Several solar PV makers bought project development companies. MEMC Electronic Materials Inc. (NYSE: WFR) acquired SunEdison, and First Solar Inc. (NASDAQ: FSLR) acquired NextLight Renewable Power. Japan’s Sharp Corp. (OTC: SHCAY) paid $305 million for project developer Recurrent Energy, and SunPower bought SunRay Renewable Energy for $277 million. The string has about neared its end though, with MEMC’s June 2011 acquisition of Axio Power, a developer of utility-scale solar projects in Canada and the US.

Large, privately held downstream companies are now essentially gone. Solar PV makers wanting to grow either have to build new capacity or look elsewhere in the value chain for opportunities. JA Solar has done both. The company plans to expand production capacity from 2,500 megawatts to more than 3,000 megawatts by the end of the year. The company’s CEO also said that JA Solar would expand wafer production capacity to 600 megawatts by December 2011.

Today’s announcement boosts JA Solar’s 300-megawatt wafer capacity by 485 megawatts, to 785 megawatts, more than 30% higher than the 600-megawatt plan. Clearly JA Solar got a good deal, paying just a 5% premium. But was it a sweetheart deal? JA Solar’s chairman owns 70% of the acquired company. How does that figure in?

Whatever. Solar PV stocks are depressed by a glut of capacity coming online in 2011 that is expected to push supply about 12% ahead of demand. JA Solar, for example, has a trailing P/E of 2.98 and a forward P/E of 4.63. The stock’s price/book ratio is a paltry 0.82. LDK Solar’s numbers aren’t any better, and JinkoSolar’s are only marginally higher.

There could be substantial value in these stocks as the solar PV industry consolidates. To unlock that value is the trick. As installation costs for crystalline solar PV fall every solar PV maker will feel the margin pressure. The traditional way of overcoming that problem is to double down on capacity and cut costs even more as the industry enters a commodity phase.

The companies best positioned to survive are the Chinese, which have proven their ability to get government support when necessary to keep the industry thriving in China. Not all the Chinese makers will survive, but the solar PV industry will and that is what the country’s government wants to see.

US-based companies, with the exception of First Solar, Inc. (NASDAQ: FSLR) are struggling. Evergreen Solar Inc. (NASDAQ: ESLR) is inches away from collapse. Energy Conversion Devices, Inc. (NASDAQ: ENER) is trading at barely above $1/share, has a negative trailing and forward P/E, and few prospects for getting well again.

The downstream acquisitions of the past year or so were not about consolidation, but about growth. Now we should begin to see some consolidation in the industry as every supplier comes under margin pressure.

JA Solar shares are trading down about -2% in early trading today, at $5.46, in a 52-week range of $4.48-$10.24. On a broader front, the Guggenheim Solar ETF (NYSE: TAN) is up more than 1%, to $7.19, in a 52-week range of $6.52-$9.34.

There is one last issue here. Even if mergers pick up in the solar space, there is no assurance that high premiums will be paid. Those old highs at the peak of the solar and energy bubble from late 2007 into 2008 will have little relevance.

Paul Ausick

Filed under: Alternative Energy, Green Biz, Mergers and Buy Outs, Shareholder Issues, Stock Buybacks, Value Investing Tagged: ENER, ESLR, FSLR, JASO, JKS, LDK, RSOL, SPWRA, TAN, TOT, WFR

Solar Stock Slide… From Leveraged Energy to Value to Something Else (FSLR, JASO, ENER, LDK, SPWRA, YGE, TSL, STP, RNWEF, SATC, TOT, TAN)

Administrator — Wed, 22 Jun 2011 14:58:52 +0000

The solar stocks used to be leveraged energy companies. The sell-off after the energy bubble popped was as bad as it could get, and now many of these companies look like value stocks. The problems of today are likely to only be magnified tomorrow. We have highlighted this on many occasions. Now comes research from Morningstar that sees weakness ahead in solar stocks. More weakness that is, ouch.

The nine stocks in the review were First Solar Inc. (NYSE: FSLR), JA Solar Holdings Co., Ltd. (NASDAQ: JASO), Energy Conversion Devices, Inc. (NASDAQ: ENER), LDK Solar Co., Ltd. (NYSE: LDK), SunPower Corp. (NASDAQ: SPWRA), Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), Trina Solar Ltd. (NYSE: TSL), Suntech Power Holdings Co. Ltd. (NYSE: STP), and Norway’s Renewable Energy Corp. ASA (OTC: RNWEF).

As we’ve said for a long time, there is really no reason to believe that the second half of 2011 will be better than the first half. Morningstar agrees. Yes, the market for solar PV will improve, but not by enough to soak up all the new capacity that will be coming online.

Yes, the decision by Germany to shut down its nuclear generation by 2022 has helped, and so has Italy’s decision not to build more nukes. But in the near term, these decisions are likely to have only a slight impact.

Global manufacturing capacity for solar PV modules is estimated to hit more than 40,000 megawatts by the end of the year. Most forecasts, including Morningstar’s, predict a demand of around 18,000-21,000 megawatts. Morningstar sees demand for 2012 solar PV at 19,500 megawatts, still below a level that will support current pricing of around $1.40/watt. Prices are forecast to fall “at least below $1.25/watt by the end of the year.” There are even those who believe $1/watt is possible.

As price/watt falls, only those companies with strong balance sheets and low cost structures will survive the carnage. And Morningstar picks First Solar and Trina as the companies that stand the best chance of weathering the storm. We’ve agreed with those picks all along, and have even suggested that JA Solar might be included.

Over at The Street.com, there is a competing list of alt-energy stocks that offer upside potential as high as 138%. The list includes First Solar and SunPower, but the other six are all either component makers or equipment manufacturers.

The top value pick is SatCon Technology Corp. (NASDAQ: SATC), a maker of inverters that convert the DC current produced by solar PV panels to AC current that can be transported or fed directly from a rooftop system into the house’s electrical system. SatCon’s 52-week range is $1.90-$5.51, and it’s trading today about an hour after opening at $2.00. If the stock hits its upside potential of 138%, the share price will be about $2.75, still about half what it was at its peak in January. The mean price target for the stock among 12 brokers is $4.75 according to Thomson/First Call.

What makes SatCon stand out is that its devices are believed to dodge the cost pressures of the solar PV modules themselves. That may not be what happens. The so-called “balance of costs” in a solar PV installation is the next place that costs have to fall. The pricing pressure will come from installers, including those owned by solar PV makers, to lower the costs for inverters, mounting brackets, and other items that go into a solar construction project.

The wreckage in the solar PV sector will continue for the rest of this year. Price targets for the entire sector have been lowered, and are likely to go lower still. It’s important to note that hurdling over a low bar is not the same as winning the high jump.

First Solar shares are down about -0.6% this morning, at $123.86, in a 52-week range of $111.40-$175.45. Trina shares are up about 1%, at $19.84, in a 52-week range of $17.00-$31.89. SunPower shares are down about -0.5%, to $17.19, in a 52-week range of $9.61-$22.60, mostly as a result of the final closing of the purchase of 60% of the company’s stock by Total SA (NYSE: TOT). The Guggenheim Solar ETF (NYSE: TAN) is up about 0.3%, at $6.89, in a 52-week range of $6.40-$9.34.

Paul Ausick

Filed under: Alternative Energy, Analyst Calls, Green Biz, Research, Utilities Tagged: ENER, FSLR, JASO, LDK, RNWEF, SATC, SPWRA, STP, TAN, TOT, TSL, YGE