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Why Agriculture And Solar Sectors Are Strong



February 24, 2011 – Comments (0)

The markets are lower today but some sectors remain strong. The agriculture and solar sectors are particularly strong in an otherwise dismal market. Why would these sectors be so strong in the face of the markets third consecutive sell off? The answer is simple. While oil has run up and people fear the demand for goods and services may diminish, individuals still have to eat. As the worlds population continues to grow, people will continue to require food. In general, populations do not reduce their food consumption when energy spikes, instead they stop going to movies, buying TV's and having parties. For good reason then, after a sell off over the last few days, agriculture stocks are finding support.  Stocks like Potash Corp./Saskatchewan (NYSE:POT) hit a low yesterday of $163.23 before rallying back to its current level at $172.25. The same type of move was seen in The Mosaic Company (NYSE:MOS).

While agriculture stocks have bounced sharply in the last day, solar stocks have remained extremely strong as well. First Solar, Inc. (NASDAQ:FSLR) is trading at $165.44, +2.42 (+1.48%) while the overall market is at the lows of the day. The reason why solar is so strong is purely because it is an alternative to oil. As oil goes higher, alternate energies like solar are cheaper in relative terms. This means more people will consider installing solar instead of spending so much money on oil and gas.

Always look at the whole picture when it comes to one commodity. There are usually many angles to view in order to make the maximum amount of money possible.

Gareth Soloway

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