(10 votes, average: 3.8 out of 5)
Loading ...Solar Companies have been cut in half in just a few short weeks, some of them deservingly so. It’s only natural that in a bear market stocks with a high P/E become favorite short candidates by many traders. I mean, who in there right mind would want to own a stock trading @ 400 times earnings when the market is getting poleaxed, ie. [[SPWR]] & [[FSLR]].
If you are like me, then you believe Solars will rise again in 2008. So what do we do? We look for a stock that got the homo hammer of death, and is now trading at an extremely cheap valuation.
And, the stock is…. [[STP]]
Lookig at the above chart, the stock briefly fell below its 200 day moving average, but managed to close above it. In my opinion, the stock is in a perfect position to start moving higher. However, we have [[WFR]] & [[SPWR]] reporting tomorrow, if reports are less than stellar, expect STP to fall further.
Lets take a look at a few numbers: STP is now trading @ 23 times next years earnigs. The company expects to grow 60% this year & 43% for the next five years (per annum). As you can see the company is trading below it’s growth rate! To me that represents tremendous value, and if this sector catches fire again, the stock should rocket higher!
Add a little solar in your portfolio, add a little STP.
Note: Upgraded today by BOA
Cut in half, as “The Fly” predicted.
Sure did, the time machine seems to be working perfectly.
Rage-
I like STP. It’s a buy under $50, but I’m not sure I’d buy it right here. Like you mentioned, it could get pulled down by SPWR and WFR.
On my radar.
Well, I am still maintaining a short position in SPWR (probably will have some negative karma come my way after they blowout earnings or something)…
BUT, I really don’t agree with you for a couple of reasons…
As much as i’m as green as Kermit, these were
momentum stocks first and foremost. Following the lead of FSLR they were great trades on the way up but the rug has been pulled. From a momentum standpoint, it’s over. Solars failed, and pretty much have failed, in any bounces we’ve had… lower highs lower lows all the way… FSLR got pummelled today on from what I saw a pretty mild downgrade… I don’t know, but once people get burned on the momo stocks, do they ever really come back?
Now as far as the solar industry goes, it has some serious hurdles to overcome. First, they really don’t have many commercially viable products. The costs and the ROI just don’t make it competitive in the marketplace right now.
Average “break even” point is something like 12 or 14 years if you wanted solar on your house. A great (non-investor) discussion on solar can be found here:
http://www.ecotality.com/blog/2007/does-solar-make-economic-sense-nyt-says-no-san-francisco-chronicle-says-yes/
They depend heavily on subsidies from governments to get their growth. Germany has led the charge (with Spain) and at the end of last year decided to begin reducing subsidies by 5% a year starting in 2009 and starting to ramp up on wind power. That is really a huge blow that hasn’t really gotten a lot of attention. The U.S. Energy Bill contained no provisions for solar, maybe the dems will change that, who knows.
My last thought is that once an industry is “hot” you’re bound to see the playing field get a lot more crowded. Nanosolar is the one company to follow here for now… it *looks* like they’ve got a manufacturing process that looks commercial (at least through the hype) and substantially cheaper. If Nanosolar lives up to the promise, alot of these companies are in big trouble and won’t be able to compete.
Agree, but look at the numbers. The company is trading below its growth rate. The numbers don’t lie, until they do.
QCLN is a green etf possessing some solar. Just a thought.
Nice chart on STP Cajun.
Agreed… while short, i took most of my positions off yesterday to make up for missing the initial “crash” the other day…good luck if you’re playing it today (not sarcastic!)