This is an excerpt from an article I originally published on Seeking Alpha on November 28, 2011. Click here to read the entire piece.)
In “5 stocks for the solar surge“, Jim Jubiak at MSN Money lays out some interesting groundrules for taking advantage of the downturn in solar to buy companies on the cheap. Jubiak identifies First Solar (FSLR), Trina Solar (TSL), SunPower (SPWR), Yingli Green Energy (YGE), and Suntech Power (STP) as his top picks. These companies have the “deep pockets” that will generate confidence in their survivability and, accordingly, a concentration of customer orders and market share. Jubiak prefers to wait a year or two for a shakeout to make likely winners more apparent. This strategy will make even more sense if European sovereign debt woes plunge the global economy into a recession in 2012. (Existing solar investors can consider some related hedges).
My prime reason for remaining interested in the solar industry is that parity with electrical grid production is imminent. {snip}…
BTU International (BTUI) …{snip}… has been one of the most revealing indicators of industry conditions and one of the most responsive. {snip}….
Financial health is another key to survivability. With the remaining solar-related earnings reported last week, I am updating my chart of debt-to-equity ratios for solar companies. {snip}…
Six months ago, there was no correlation between the debt-to-equity ratio and year-to-date price performance. In fact, it was slightly negative at -.16. Now, this correlation has swung positive to 0.21. As the downturn deepens, I expect this correlation to continue to strengthen. The current relationship appears to support Jubiak’s early picks of YGE, SPWR, TSL, and FSLR. STP is marginal. I will continue to monitor this chart in 2012.
…{snip}…
Be careful out there!
This is an excerpt from an article I originally published on Seeking Alpha on November 28, 2011. Click here to read the entire piece.)
Full disclosure: long FSLR, TSL, GTAT, SOL, LDK, JASO
List of companies:
CSIQ: Canadian Solar
CSUN: China Sunergy Co. Ltd
DQ: DAQO New Energy Corp.
FSLR: First Solar Inc
HSOL: Hanwha SolarOne Co.
JASO: Ja Solar Holdings Co. Ads
JKS: Jinko Solar
LDK: LDK Solar Co. Ltd
SOL: ReneSola Ltd.
GTAT: GT Advanced Technologies
SPWR: SunPower Corp.
STP: Suntech Power Holdings Company Ltd.
TSL: Trina Solar Ltd.
WFR: Memc Electronic Material
YGE: Yingli Green Energy Holdings Co.
Always a good read, thanks!
You’re welcome!