One Solar Stock Stays Ahead of the Pack (ENER, JASO, FSLR, SPWRB, CY)

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One year ago, the share price for Energy Conversion Devices (NASDAQ:ENER) was $29.31. Shares rose to a 52-week high of $83.33, closing yesterday at $38.04. That’s off 52% from the high, but nearly 30% higher than a year ago.  However, Energy Conversion is still the only solar panel company of the major solar go-to stocks that shows a gain for the past 12 months.

JA Solar (NASDAQ:JASO) is off 86% from its 52-week high,  FirstSolar (NASDAQ:FSLR) is off 56% and SunPower (NASDAQ:SPWRB) is offnearly 71%. Compared with a year ago, JA Solar down 75% and First Solaris down 9%. SunPower, which was spun off from Cypress Semiconductor(NYSE:CY) in late September, has fallen 46% since its IPO.

The conventional wisdom is that solar stocks are following crude pricesdown, just like every other energy stock. There’s a good bit of truthin that.

But there could also be something else at play here. An awful lot ofsolar panels are manufactured in China. Chinese manufacturers employ alot of people. If demand for solar panels drops, what will China dowith their manufacturing capacity for solar panels and the employeeswho make them?

We’ve commented already today on China’sexport prospects. But the country’s bigger problem could be a squeezeon its domestic economy. The level of consumer spending in China needsto increase, and the nearly $600 billion stimulus package thegovernment announced yesterday should be going to new jobs andinfrastructure improvement. However, there was really nothing in theannouncement to indicate that that would happen.

If China invests that money in its export manufacturing sector, themoney will do no good at all. Where will they sell all that new stuff?And building inventories is hardly a winning strategy either.

Solar panel suppliers are not likely to see any help from the $600billion. Until the global economy warms up, China’s solar sector islikely to be more dependent upon the price of oil, economic trends, andon the direction of speculative stocks rather than on filling the voidin supplying endless alternatives to foreign energy dependence.

Paul Ausick
November 11, 2008