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Solar Stocks Rebounding Again Today; Is it Time Yet?

Posted on | December 17, 2008 Time: 11:46 am |

I continue to pine after a solar company…I just don’t know which one, and I sure don’t know when. After reading SunPower’s (SPWRA) white paper on “levelized” electricity theory, I am a believer in the viability of solar as a key alternative energy.

But remember the big bounce the industry saw right after the election? I do, and realized at the time that the downside catalysts outnumbered the positive ones. For example, I’ve seen estimates of total megawatts produced in 2007 anywhere from 2900-3700 mw, and every major producer has been investing in massive capacity upgrades in the past year.

Polysilicon continues to be headed towards a supply gut, highlighted by news that Dow Corning would be investing about $3 billion to add 30,000 metric tonnes of capacity on line, which will add about 25% to the total expected global capacity by 2010.

Here’s a look at how the big solar names have done since November 4th, the last time speculative interest in solar stocks peaked out:

(click on the chart for a better view…)

The top two lines on this relative performance chart are SunPower (SPWRA) and First Solar (FSLR), reflecting their leadership in technology and innovation. SunPower should become the dominant U.S. producer and could be the first to $1/w, while First Solar is the leader in thin-film production, which could supplant the bulk of current industry production within 5 years.

So is it time yet? I don’t feel any particular rush, but with that said valuations are still compelling (if you believe in viability) and balance sheets are generally strong industry-wide. A friend in the White House certainly adds to the medium-term catalysts, but I wonder if direct subsidies are not an option while other stimulus measures get the most of the Administration’s early attention.

Ryan Barnes

Disclosure: Author does not hold positions in the companies mentioned.

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Category: Basic Materials, Solar, Technology
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