Three out of four of the companies that have reported recently were down.
The ones we looked at this morning*:
STP- down 2.83%
CSIQ- down 13.45%
SOLF- down 22.08%
ENER- UP 0.35% (although it's getting spanked [-2%] after-hours)
Granted we were assisted by a timely downgrade of SOLF by Goldman and by a piece Mark Gongloff did for the WSJ's Ahead of the Tape column:
Solar Stocks:
Hot Enough
To Get Burned
...Solar's pricing power has held steady, but could be at risk next year, given the vast and growing number of people making solar panels.
China's Suntech Power Holdings, which reports earnings Thursday, may be on track to be the world's biggest PV-module maker this year. But at the end of 2006, the latest data available, it had at least 180 competitors, according to Friedman, Billings, Ramsey analyst Mehdi Hosseini. That number has almost certainly grown and threatens to drag PV-module prices lower.
Of course, there are plenty of reasons why the lights won't go out on solar the way they've gone out on ethanol. Both industries depend heavily on government subsidies. But solar seems less likely to fall out of public favor than corn ethanol, which has contributed to soaring food costs.
Solar is cleaner and getting cheaper. Corn ethanol will likely never be economically or environmentally viable without government handouts.
Still, solar stocks are speculative and volatile. While the industry's prospects look far brighter than ethanol's, that doesn't mean they can defy gravity.
As with everything in life, timing is everything.And sometimes you get lucky.
*Suntech Power net income doubles, beats target. And: Playing the Solar Game (STP; ENER; CSIQ; SOLF)
