When First Solar was up $3.00 earlier this morning I thought " Say.... Something may be happening".
Currently up $1.70 at $135.28.
From Mercenary Trader:
Three Trades for the Solar Rebound
If the first few days of trading are any indication, solar stocks are poised to rebound sharply in 2011. During the first week in January, a number of key industry names have already broken higher out of various basing patterns, and the strong fundamentals are likely to attract attention from both growth and value investors.
From our perspective as traders, there are a number of reasons to like this industry:
- Broad energy prices are on the rise – giving solar energy a more competitive landscape
- Valuations have dropped to a level where the worst-case scenario should be priced in.
- Historically, the solar energy market is very “trendy” with extended bullish or bearish periods
Of course, there are significant concerns for this market that cannot be papered over. Europe’s debt crisis and future austerity plans will most definitely affect the demand side of the equation. In the past few years, European government subsidies have generated a large portion of demand for solar products – subsidies that are not likely to continue in 2011.
- Traders are likely to be over-committed to the short side of this market – offering fuel for a sharp rebound
But despite these setbacks, emerging market demand along with higher prices for traditional energy has created an improving competitive landscape – and a number of solar names look like great trades at this point.
China Picks up the Slack
While solar energy expansion is likely to moderate in Europe, China is set to pick up the slack with significant solar investments.
The emerging market superpower has set a goal of generating 20% of its power from renewable energy by the end of the decade. This means a huge ramp in solar installations. Keep in mind that China’s power consumption is will experience robust growth with a broad portion of the population moving from an agrarian to an urban standard of living.
Solar companies are winning huge contracts – helping the country move toward this challenging goal. For instance, First Solar Inc. (FSLR) is currently working with a national power company to build what will be the worlds largest solar energy plant near Mongolia.
U.S. solar panel maker First Solar Inc. said it is working with China Guangdong Nuclear Solar Energy Development Co. to revive a project to build what it expects to be the world’s largest solar-energy plant in China’s Inner Mongolia region.China’s economic growth has not occurred without significant challenges along the way. Food and housing inflation currently represent the most difficult hurdles to tackle, but higher energy prices give policy-makers even more incentive to increase investment in renewable energy....MUCH MORE
The two companies will cooperate on the first phase of a two-gigawatt solar field, First Solar President Bruce Sohn said on Wednesday. Work on the 30-megawatt demonstration project in Ordos will likely begin by the end of this year, and the whole project is expected to be completed by 2020.
First Solar Plans Inner Mongolia Project – WSJ