Energy
Solar Players Looking Again Like Leveraged Oil Trades (FSLR, STP, SPWRA, LDK, ENER, TAN, PBW, CSIQ)
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Investing in solar and alternative energy stocks comes with many risks. We have often referred to many of these companies as being essentially nothing more than very leveraged speculative oil investments because when energy prices are low most forms of alternative energy are not competitive on a cost structure. The drop of $2.62 per barrel to $66.93 in NYMEX WTI Crude is causing havoc in some of the mid-cap and speculative oils stocks. It is also hitting shares of First Solar, Inc. (NASDAQ: FSLR), Suntech Power Holdings Co. Ltd. (NYSE: STP), SunPower Corporation (NASDAQ: SPWRA), LDK Solar Co.Ltd. (NYSE: LDK), and Energy Conversion Devices, Inc. (NASDAQ: ENER). This is also seen directly in the ETFs of Claymore/MAC Global Solar Energy (NYSE: TAN) and PowerShares WilderHill Clean Energy (NYSE: PBW). Speculative stocks like Canadian Solar Inc. (NASDAQ: CSIQ) look even worse.
In our price/volume alerts over at VSInvestor.com, we saw severe price alerts in many of the more speculative oil and energy stocks.
First Solar, Inc. (NASDAQ: FSLR) is down almost 5% at $164.85 and it is the leader in the U.S. as far as which solar stocks can stay profitable at current, higher, and even lower energy prices.
Suntech Power Holdings Co. Ltd. (NYSE: STP) is the next largest on the trail, and its stock is down over 5% at $17.08 on rather active trading. Its market cap is still $2.66 billion.
SunPower Corporation (NASDAQ: SPWRA) is getting hit by 7.5% at $26.36 and its market cap is still $2.27 billion.
LDK Solar Co.Ltd. (NYSE: LDK) is down almost 7% at $10.26 and its market cap is still $1.16 billion.
Energy Conversion Devices, Inc. (NASDAQ: ENER) is down 4.4% at $15.10, yet trading volume is very thin on this issue.
ETF’s are also getting hit hard. The Claymore/MAC Global Solar Energy (NYSE: TAN) is down almost 6% at $9.33 on already half a day’s volume and and the PowerShares WilderHill Clean Energy (NYSE: PBW) is down 4.4% at $9.89 on only about 20% of normal trading volume.
If you get down into the more speculative stocks, shares of Canadian Solar Inc. (NASDAQ: CSIQ) look even harder hit. Its shares are down 10.5% at $11.68.
Solar stocks are not really oil stocks. But if oil prices do not stay high, then the subsidies are going to have be juiced significantly for the sector as a whole to carry much in significant profits.
Jon C. Ogg
June 22, 2009
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