Alternative Energy Shares Troubled (YGE, SPWRA, TSL, ENER, AONE, CRTP)

This morning’s report on unemployment has cooled enthusiasm for shares across the board. Solar stocks are, for the most part, no exception. Yingli Green Energy Holding Co. Ltd. (YGE) is down nearly 3%, SunPower Corp. (SPWRA) is off more about 2.25%, Trina Solar Ltd. is down about 3.5%, and Energy Conversion Devices, Inc. (ENER) is off more than 3%. Two stocks, A123 Systems Inc. (AONE) and China Ritar Power Corp. (CRTP) are flying against the headwinds. A123 is up more than 7% and Ritar is up about 2% in early trading.

The solar makers face an over-supply situation by the end of the year and that has been putting pressure on share prices for some time. Energy Conversion Devices has been suffering the most, with share prices down more than 80% in the past year. Today the company announced that it is adopting a tax benefits preservation plan to save the company’s “substantial net operating loss carryforwards.” The plan is designed to discourage a single shareholder from owning 5% or more of the company’s shares. Current shareholders owning less than 5% of outstanding shares receive one ‘Right’ per share to purchase an additional share of stock at 50% of the then-current share price in the event someone attempts to purchase 4.9% or more of the company’s shares. Any purchase attempting to make such a purchase automatically loses these ‘Rights’.

While solar makers are taking their lumps today, battery makers A123 and Ritar, are going against the trend. A123 has posted a new intra-day high of $23.46/share. Ritar follwed suit with a new intra-day high of $6.03.

A123 is the latest darling of alternative energy stocks with its lithium-ion technology believed to be positioned to grab a significant share of the electric vehicle market. Ritar, which makes lead-acid batteries, is gaining attention for the possibility that it could grab a leading position in electricity storage at wind and solar farms.

These two could be yet another example of too much money chasing too few good opportunities. Neither electric vehicles nor electricity storage are sure things, and certainly not in the near term. It might be nice to believe that investors are taking a long-term view of these alternative technologies, but that’s unlikely. Far more likely is that A123 and Ritar are the newest flavors of the month, and that they’ll be replaced when something else equally cool or cooler comes along.

Paul Ausick