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JimVanMeerten (61.59)

Are the projections about the solar industry too bright>

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January 20, 2011 – Comments (5) | RELATED TICKERS: TSL , JKS , SOL

Am I the only one who is having butterflies about the solar industry?  Is there a market for this renewable energy resource or is it all just smoke and mirrors? Using Barchart I found 4 solar stocks that on average are up over 20% in the last month alone.  The brokerages have fantastic projections, there is very high investor sentiment but my intuition is holding me back from making a recommendation.  Here's what others think, let me hear your opinions.

JKS - Jinkosolar -- a solar product manufacturer with operations based in Jiangxi Province and Zhejiang Province in China. JinkoSolar has built a vertically integrated solar product value chain from recovered silicon materials to solar modules. JinkoSolar's principal products are silicon wafers, solar cells and solar modules which are all along the photovoltaic value chain, with a global network spanning across Europe, North America and Asia.

1- Barchart Trend Spotter (tm) technical buy signal

2 - 9 new highs and up 29.13% in the last month

3 - Relative Strength Index 64.33% and rising

4 - Trades around 28.16 with a 50 day moving average of 24.63

5 - Wall Street brokerages have 4 buy, 1 hold and 2 under perform recommendations

6 - Revenue projected to increase 177.40% this year and 43.10% next year

7 - EPS estimated to increase 1,302.30 this year and increase annually 15.00% for at least 5 years

8- Motley Fool CAPS members vote 75 to 22 and All Stars vote 14 to 8 that the stock will beat the market

SOL - Rensola --   RENESOLA and its subsidiaries are engaged in manufacturing solar wafers in the People's Republic of China. The company's solar wafers are sold to both Chinese and international photovoltaic cell and module manufacturers. The company's customers include some of the leading manufacturers of solar cells and modules, such as JA Solar Co., Ltd., Motech Industries Inc., Solarfun Power Holding Ltd., Suntech Power Co. Ltd. and Topco Technologies Corp.

1 - Barchart Trend Spotter (tm) technical buy signal

2 - 8 new highs and up 23.40% in the last month

3 - Relative Strength Index 55.18%

4 - Trades around 10.23 with a 50 day moving average of 9.42

5 - Wall Street brokerages have 8 buy and 2 hold recommendations published

6 - Revenue projected to increase 131.50% this year, 16.80% next yea

7 - rEPS estimated to increase 324.40% this year, 11.90% next year and 11.67% annually for at least 5 years

8 - Motley Fool CAPS members vote 1,103 to 29 and the All Stars vote 297 to 4 that the stock will beat the market

LDK - LDK Solar -- a manufacturer of multicrystalline solar wafers, which are the principal raw material used to produce solar cells. LDK sells multicrystalline wafers globally to manufacturers of photovoltaic products, including solar cells and solar modules. In addition, the company provides wafer processing services to monocrystalline and multicrystalline solar cell and module manufacturers. LDK's headquarters and manufacturing facilities are located in Hi-Tech Industrial Park, Xinyu City, Jiangxi province in the People's Republic of China. The company's office in the United States is located in Sunnyvale, California.

1 - 88% Barchart technical buy signa

2 - l5 new highs and up 21.09% in the last month

3 - Relative Strength Index 62.40% and rising

4 - Trades around 12.72 with a 50 day moving average of 11.11

5 - Wall Street brokerages have published 10 buy, 6 hold and 5 under perform recommendations

6 - Revenue projected to increase 111.60% this year and 27.60% next year

7 - EPS estimated to increase by 188.10% this year, 19.90% next year and 23.35% annually for the next 5 years

8 - Investor sentiment on Motley Fool is high with the CAPS members voting 1,372 to 94 and the All Stars 320 to 33 that the stock will bet the market

TSL - Trina Solar --  currently one of the few private manufactures who has developed a vertically integrated business model from the production of monocrystalline ingots, wafers and cells to the assembly of high quality modules.They are led by an international management team from over 6 different countries with deep solar private industry experience.They has reached long term partnerships with leading technology suppliers in Switzerland, Italy and Germany, which provide the latest technology for Their production facilities in China. These partnerships are another quality guarantee for Their end customers and enable Them to work jointly towards a brighter future.

1 - 80% Barchart short term technical buy signal

2 - 13 new highs and up 18.66% in the last month

3 - Relative Strength Index 65.16% and rising

4 - Trades around 27.37 with a 50 day average of 24.35

5 - Wall Street brokerages have published 25 buy, 3 hold and 2 under perform recommendations

6 - Revenue projected to increase by 104.10% this year and 18.10% next year

7 - EPS estimated to increase 100.00% this year, 8.00% next year and 18.98% annually for the next 5 years

8 - Investor sentiment on Motley Fool high with the CAPS members voting 1,034 to 186 and the All Stars 267 to 64 that the stock will beat the market.

As I write this post this song keeps ringing in my head:


Everybody's wrong everybody's right 
Someone must be wrong when someone else is right 
Everybody's wrong everybody's right 
You tell me that I'm wrong 
Then you tell me that I'm right 

Are too many people expecting too much from the solar industry?  Is the industry already over valued?  Should I get on board or hop off?    IS everybody wrong or is everybody right?
Comments please!!!!

Jim Van Meerten is a professional investor with over 40 year experience in investing in stocks, mutual funds and ETFs.  He shares his knowledge on Barchart in his daily blogs -- Barchart Portfolio Blogs.


Through Marketocracy Capital Management you can have a Separately Managed Account that mirrors his Barchart Van Meerten New High portfolio.

5 Comments – Post Your Own

#1) On January 20, 2011 at 2:15 PM, cmmtgnmn (58.13) wrote:

1. Solar will continue to grow in the U.S. by leaps and bounds in 2011 and beyond. According to GTM Research Managing Director Shayle Kann, 1.5 gigawatts of solar could be installed in the U.S. in 2010. “The U.S. PV market will grow more than global demand in 2012 and beyond,” he said. ----- 

2. It won’t just be California making solar headlines. The majority of states—29, according to the Database of State Incentives for Renewables and Efficiency—have enacted an RPS and 7 more have RPS goals in place. As utilities and power producers race to meet the requirements, large-scale photovoltaic projects are likely to start springing up all over the place.----

3. Major firms will enter the solar market in 2011. The entrance of these and other companies show that the industry is reaching new levels of maturity and the big boys want to get in before its too late.  ----

4. Fossil fuel prices will increase, making solar more attractive. Across the board, from oil, to coal and natural gas, the cost of digging up deteriorated dinosaur remains is going to get more expensive. Already gas industry analysts are projecting that gas will again cost more than $3.00 a gallon across the U.S.----

5. Solar prices will drop both in terms of module costs and installation costs, making solar even more attractive. Module costs for solar panels have been dropping almost every year.

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#2) On January 20, 2011 at 2:29 PM, JimVanMeerten (61.59) wrote:

My point exactly

1 -  if everyone buys the stocks then the stock price get high

2 effeciencies in product production means price competion

3 prices for the product go down and squezze profit margins

4 Stock prices going up and profit margins getting squeezed?  How then they fufill the profit expectations???

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#3) On January 20, 2011 at 2:53 PM, Seansonfire (36.83) wrote:

Jim-  The solar stockas you describe are all up 20% over the last month because most were down 40% the previous 2 months.  This reasoning behind this is actually driven by some rationality in the fear that German Feed in Tariffs would be cut in 2011.  So they went down about 40% on fears of German feed in tariffs would be cut by a huge amount, which in turn they were cut by less then previously forecasted, and thus the 20% increase in the past month.

Post #1

- The price of Gasoline has nothing to do with the demand for Solar, as Gasoline is a tranportation fuel, and Solar cells produce electricity for the grid.  I hate when people try to make that argument.  If anything the price of Natural Gas is the closest competitor to Solar, as someone looking to build a new power plant that was considereing using Solar, would also consider Nat. Gas as an alternative.  Except for the fact that the main reason you build solar is the RPS and other government incentives, the costs are only competitive to Nat Gas in certain places if you had no government assistance.

I agree Solar is going to experience huge growth over the next 5 years, but you have to choose the companies with the lowest cost structures as prices will get cheaper before its competitive for Solar to be unsubsidized.  FirstSolar, ReneSola are both low cost producers that I own.

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#4) On January 20, 2011 at 3:19 PM, soycapital (< 20) wrote:

Any good etf's or mutuals for solar? I'm uncomfortable in these individually.

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#5) On January 21, 2011 at 12:01 PM, JimVanMeerten (61.59) wrote:

I would not invest in solar ETF's or mutuals - I would not buy the industry as a whole.  There will be a lot of failures.  You must be selective to find those that can turn technology into profit.

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