(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
On July 11, GT Solar (SOLR) fell 4% in the wake of an ominous headline from Solarbuzz® titled “PV Equipment Spending to Fall by Nearly Half in 2012.” This article is a synopsis of Solarbuzz’s latest “PV Equipment Quarterly,” and it was widely quoted in the media. The following day, SOLR fell another 9% along with a continued sell-off in solar stocks in general.
*Chart created using TeleChart
The sell-off was understandable. Not only is the Solarbuzz article extremely negative on 2012 equipment orders, but the report dropped smack in the middle of another flurry of worries about European sovereign debt. Europe is a major market for solar panels.
Here is the key highlight of the article…
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On June 20, I wrote a detailed review of SOLR’s last earnings report. SOLR management acknowledged the current weakness in the solar market while also noting the strength of its customers who need to make equipment plans far into the future. The company has developed a strong backlog and is well-prepared to handle the solar industry’s business cycles. Additionally, SOLR is rapidly growing its equipment and material production for the LED industry – a major source of diversification for the company.
Here are some of the many relevant examples of management commentary from my previous post:
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Regarding equipment planning and the PV cycle:
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In other words, SOLR’s management is well-prepared to navigate the vicissitudes of the solar market for many years down the road. Sell-offs in SOLR’s stock are buying opportunities for long-term investors.
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Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Full disclosure: long SOLR