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

The study’s sponsor, the Coalition for Affordable Solar Energy, represents primarily installers and makers of all the pieces that go into a solar project except the panels themselves. The panel makers, led by the US division of Germany’s Solarworld AG which has about 1,400 employees in the US, filed the complaint late last year.

Virtually all solar panels are manufactured in Asia where tens of thousands of Chinese, Thais, and Filipinos are employed on assembly lines owned or leased by US companies like First Solar Inc. (NASDAQ: FSLR) and Sunpower Corp. (NASDAQ: SPWR). The solar installers’ group represents hundreds of mostly small businesses that are happy with the low US prices for solar panels because it means more work and more profit for them.

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

Rather than chasing market share, solar makers need to hold the line on supply increases, keep inventories under control, and, most important, return to profitability. The CEO of Taiwan’s Giga Solar Materials Corp. told Digitimes that he expects the market for solar panels to improve by the second quarter of the year.

Giga Solar makes the conductive aluminum paste used in solar cell manufacturing, and the company expects sales growth of 10-12% in 2012. Sales of silver paste are expected to post “tremendous growth” this year.

This prediction is based on fourth-quarter 2011 inventory clearing which should restore the supply/demand balance and help stabilize prices. Then production needs to be rationalized.

According to Solarbuzz, total shipments in 2012 need to be reduced by 4,900 megawatts from the industry’s goal of 28,200 megawatts. The industry research firm also notes that year-end inventories are estimated to be around 7,300 megawatts, down from a previous estimate of 8,600 megawatts.

The first calendar quarter of the year is a traditionally tough one for solar makers as the weather makes installations problematic. During the first quarter we could see prices and margins continuing to fall. As the weather improves so should demand, although Germany’s 15% feed-in tariff reduction will like cause a further decline in orders from German buyers.

The report in Digitimes is giving solar stocks a shot in the arm today. Yingli is up more than 8% at $4.11 in a 52-week range of $2.75-$13.59. First Solar shares are up more than 5% at $35.50 in a 52-week range of $29.87-$175.45. Sunpower’s shares are also up more than 5% at $6.56 in a 52-week range of $4.94-$23.36. Suntech shares are up about 3.5% at $2.29 in a 52-week range of $1.70-$10.83. The DJIA is up nearly 2% this morning.

Paul Ausick

After the first half hour of trading this morning, SunPower is up nearly 8% at $6.31. Volume has already passed the company’s daily average. The solar panel maker agreed to buy solar company Tenesol from Total SA (NYSE: TOT) for $165 million. SunPower will pay for the acquisition with 18.5 million new shares issued to Total, at a per share price of $8.80, about 50% higher than yesterday’s closing price.

Bioanalytical Systems is up nearly 8% at $1.50. Volume has already doubled the daily average. The biopharmaceutical company reported good earnings earlier this week.

Rambus is up more than 15% at $8.42. Volume is already equal to the daily average. The semiconductor memory chip maker has reached a patent licensing agreement with Broadcom Corp.

Skyline is down more than -8% at $4.30, after posting a new 52-week low of $4.14. Volume already surpasses the daily average. The manufactured home builder has been dropped from the S&P 600 index.

CalAmp is down more than -13% at $4.44. Volume is double the daily average. The wireless technology company reported lower-than-expected earnings this morning.

Paul Ausick

The Financial Times cites an internal memo from BP Solar’s CEO:

The continuing global economic challenges have significantly impacted the solar industry, making it difficult to sustain long-term returns for the company.

A company spokesperson confirmed the closure, “Over the last six months we have realised that we simply can’t make any money from solar.” Falling prices for solar panels have killed a business that BP has operated for 40 years.

On the same day, a solar industry group called the Coalition for Affordable Solar Energy (CASE) has released a letter to the CEO of Germany’s Solarworld US operations urging the company to withdraw a suit filed with the US International Trade Commission seeking tariff protection on solar panels imported from China. The letter states, that the suit “threatens the planned installation of solar electric power systems in the amount of $11 billion in 2012 and the potential installation of $60 billion currently in the total pipeline.”

The letter goes on to note:

SolarWorld’s petition will do far more damage than good to the U.S. solar industry as a whole. CASE’s membership is representative of 97-98% of America’s solar industry, as the large majority of all U.S. solar industry jobs are downstream of solar panel manufacturing in project development, logistics, construction and installation.

Solar panel makers, even including low-cost Chinese providers, are staggering under collapsing prices, while solar installers, like those that are members of CASE, are getting a big boost from the low prices for solar panels. More than 100,000 Americans are currently employed installing solar projects from rooftops to utility-scale. Solar manufacturing probably accounts for fewer than 5,000 US jobs, not counting workers in US owned factories overseas.

It should be no surprise that BP has finally decided to get out completely.

Paul Ausick

The unofficial closing bells put the DJIA down nearly 132 points to 11,823.48 (-1.1%), the NASDAQ fell nearly 40 points (-1.55%) to 2,539.31, and the S&P 500 fell -1.13% or nearly 14 points to 1,211.82.  So far this week, the indexes have closed lower every day.

There were several analyst upgrades and downgrades today, including General Electric (NYSE: GE) reiterated as ‘outperform’ with the target price raised to $22 at Credit Suisse. Other ratings actions today include Yahoo Inc. (NASDAQ: YHOO) restarted as ‘sell’ at Goldman Sachs; Yum! Brands Inc. (NYSE: YUM) reiterated as ‘buy’ and target price raised to $60 at Argus; Altria Group Inc. (NYSE: MO) cut to ‘hold’ at Stifel Nicolaus; and Avon Products Inc. (NYSE: AVP) raised to ‘outperform’ at BMO Capital. Groupon Inc. (NASDAQ: GRPN) received ratings from a slew of analysts this morning, and the results are in our full ratings coverage.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Joy Global Inc. (NYSE: JOY) is down nearly -11% at $75.54 and Synovis Life Technologies Inc. (NASDAQ: SYNO) is up 0.2% at $27.83. Synovis received a buyout offer yesterday at $28/share from Baxter International Inc. (NYSE: BAX). Tomorrow’s big earnings releases come from Adobe Systems Inc. (NASDAQ: ADBE), Discover Financial Services (NYSE: DFS), and Fedex Corp. (NYSE: FDX).

Other standouts from today include the following stocks:

First Solar Inc. (NASDAQ: FSLR) is down more than -21% at $33.46, after posting a new 52-week low of $33.08 earlier today. The solar PV maker lowered guidance this morning. See our coverage here.

Avon Products Inc. (NYSE: AVP) is up almost 5.5% at $17.02. The cosmetics company is replacing CEO Andrea Jung. We have more on the story here.

eOn Communications Corp. (NASDAQ: EONC) is up about 108% at $2.12. The online marketing company reported good earnings yesterday, but not that good. Investors must be anticipating a buyout offer.

Silicon Graphics International Corp. (NASDAQ: SGI) is down nearly -17.5% at . The computer maker’s president/CEO has resigned, effective January 1st, to take a position as president and CEO at another company.

SunPower Corp. (NASDAQ: SPWR) is down more than -15% at $5.35, after posting a new 52-week low of $5.34. The solar maker is caught in the general sell-off of solar stocks following the lowered guidance from First Solar.

RADVision Ltd. (NASDAQ: RVSN) is down nearly -12% at $8.57. The communications equipment maker’s shares jumped more than 14% yesterday on talk of a buyout by Avaya. The falling share price is very likely discounting yesterday’s rumor.

Stay tuned for a busy Thursday. Here are some other noteworthy events on the schedule (all times Eastern):

• 8:30 a.m. – New unemployment claims report
• 8:30 a.m. – Producer price index report
• 8:30 a.m. – Empire State Manufacturing survey
• 9:15 a.m. – Industrial production report
• 9:45 a.m. – Bloomberg consumer comfort index
• 10:00 a.m. – Philadelphia Federal Reserve survey
• 10:30 a.m. – EIA weekly natural gas report
• 1:00 p.m. – 5-year TIPS auction
• 4:30 p.m. – Federal Reserve balance sheet and money supply report

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Paul Ausick

First Solar posted a 52-week high of $175.45 in mid-February, and the stock is trading around $44 today. The median target price for the stock is $56.00, down from $108.50 on October 24th, a decline of -52%. At today’s target price and today’s share price, the implied upside for First Solar stock is 28%. The company’s forward P/E is 5.84, only a bit less than the 5.97 of a month ago.

SunPower, which has combined its A and B shares into a single issue, has a median target price of $9.00, compared with $13.00 a month ago, a drop of -30%. The stock’s 52-week high is $23.36 and it is trading today at $6.94. At today’s target and share prices, the implied upside for SunPower stock is nearly 30%. The company’s forward P/E is 15.8, compared with 9.28 on October 24th.

LDK Solar has a median target price of $2.60, compared with $5.80 a month ago, for a drop of -55%. The stock’s 52-week high is $14.97 and it’s trading today at $3.40. LDK has already surpassed its new price target, indicating, perhaps, that analysts were too negative in their outlook for the company.

The reason for LDK’s better-than-target price has got to be the belief among investors that the stock has hit bottom and can’t fall any further. That says nothing really about when the stock might turn around its dismal performance permanently.

Unlike LDK, both First Solar and SunPower are both about 30% below their new target prices. But does that indicate a value play or a value trap? Like LDK, the market appears to have called a bottom on these stocks, both of which posted 52-week lows since late October.

In each case, the stock has been beaten down so badly that everything looks like up. There could be an opportunity in First Solar’s stock, as its forward P/E indicates. SunPower appears to be fully valued with a forward P/E of nearly 16.

None of these companies is as bad as its current share prices would indicate, but how long it takes them to recover is a different issue. There’s little expectation that 2012 will be much of an improvement on 2011. For investors willing to wait until 2013 the outlook is better, mainly because next year is expected to see the demise of more solar PV makers. Still, because more than half of all solar panels are made in China, the manner in which the solar market consolidates really remains an unknown.

Paul Ausick

To make this determination, we’ve looked at a number of characteristics we think will play an important role in shaping the industry’s future. First, we chose companies we think are market leaders based on their market capitalization, revenues, and technology leadership.

Second, we tried to assess the longer-term opportunities a company has based on its current influence, the strength of its competitors, how much influence government policy will have on its success, and how likely it is and how quickly the company’s products can be implemented at a reasonable scale.

Third, we tried to assess a company’s access to capital. Some of the questions we asked were: Is it publicly traded or privately held, how strong is its balance sheet, and, perhaps most important, how much support can it expect from government?

Fourth, we looked at a company’s customers, their size, and their influence in their own industries. Finally, we tried to assess how high the barriers are to competitors entering the same sector. Likewise, how well can a company fight off competition that’s already in the sector?

Not every company has a top rating in each category, but the ones we’ve picked have a good many of them.

In addition to looking at the companies, we’ve also identified a few issues that are going to provide the context for alt energy companies in the years ahead. Perhaps the most important of these, from a commercial standpoint, is what policies China and the US will adopt. China plans to spend aggressively on its own domestic alt energy initiatives, and it is pouring enormous amounts of money into the coffers of several of the country’s manufacturers.

Other areas that bear watching are consumer acceptance for electric vehicles and plans for infrastructure investments in the electricity grid and in smart-grid technology.

Solar Photovoltaic

There are dozens of companies developing products to tap into the solar PV market. The issues in that market come down to volume and cost compared with efficient conversion of sunlight into electricity. Thin-film technology has emerged as the cost leader, and, because it is somewhat easier to manufacture, the volume leader as well. Crystalline silicon technology has been more costly to produce, but the higher conversion rates have helped keep the costs reasonably comparable to thin-film cells.

The ‘holy grail’ of solar PV makers is cost parity with fossil fuel-generated electricity, like coal-burning power plants. The race to parity is the next great competition. The first company to cross the finish line will need to get a lot of help from the makers of all the equipment that goes into finishing and installing solar panels, of whatever technology. Solar PV makers need to ramp production, lower costs, and win big contracts for utility-scale projects.

1. First Solar Inc. (NASDAQ:FSLR) was until recently the volume leader in the solar PV industry. It’s thin-film products offer a significant price advantage over the mono- and multi-crystalline products offered by its competitors. From 2009 to 2010, First Solar reduced its cost by 14% to $0.76/watt. No other solar technology is even close. Combined with a market cap of around $12 billion, a solid European customer base (which could erode if government subsidies are cut substantially or eliminated), a solid balance sheet and its own installation pipeline, First Solar is in a very good position to prosper.

The company also has a joint venture in the works with a Chinese partner to build a 2,000 megawatt solar PV project in Inner Mongolia. First Solar’s contract for the deal is being challenged by some Chinese solar PV makers. If the company loses the deal it would be a big blow to its plans. However, losing the deal may not be the worst thing that could happen.  That is because it would prevent First Solar from having to share its technology with the Chinese, which is a condition of the original contract award. Keeping the crown jewels in the vault may be worth more than the few billion that the Mongolian project will generate.

Also Read: New Study On Broadband Quality Ranks US 15th

2. SunPower Corp. (NASDAQ:SPWR) currently boasts the highest conversion rate of sunlight to electricity of all the solar PV makers. The company’s components business accounted for 61% of all its revenues in 2009, up from 40% in 2007. The company’s components include solar panels and inverters. SunPower’s systems business declined from 60% in 2007 to 39% in 2009. To turn that back around, SunPower has acquired a downstream company with a good project pipeline. That acquisition should start the turn-around in 2010, and continue to improve in 2011.

SunPower’s international business accounted for 71% of its 2009 sales, and it has a strong position in Germany, which is expected to install about 6,700 megawatts of solar PV in 2010. One megawatt generates enough electricity to power 800 households for an entire year. SunPower, however, is not among the low-cost providers and must depend on its superior (for now) conversion rate to differentiate itself from its competitors. For SunPower to live up to its place on our Top 25, it needs to maintain its technological leadership and become more competitive on downstream projects.

Rigel Pharmaceutical Inc. (Nasdaq: RIGL) shares are down sharply after its rheumatoid arthritis candidate missed its efficacy endpoint in a trial.

Microsoft Corp. (Nasdaq: MSFT) are the most active in the premarket, after it reported  lower-than-expected revenue that fell 17.3% from the same period last year.

SunPower Corp. (Nasdaq: SPWR) shares are among the biggest premarket gainers after the company posted a 10-cent a shre earnings beat, and gave upside guidance.

Align Technology Inc. (Nasdaq: ALGN) shares also are on the rise, after an earnings beat.

Amazon.com Inc. (Nasdaq: AMZN) shares are down nearly 6 percent as one of the most active decliners, after it reported in-line EPS.

Juniper Networks Inc. (Nasdaq: JNPR) shares are down on strong premarket volume despite better-than-expected earnings results, as gross margins were disappointing.

LM Ericsson Telephone Co. (Nasdaq: ERIC) shares are down 7 percent after it reported earnings this morning.

Sepracor Inc. (Nasdaq: SEPR) shares are up on strong volume following its earnings and raised fiscal 2009 guidance.

-The 24/7 Wall St. Team