Your Pick: " First Solar Q2 Preview: Citi Sees Major EPS Upside". Or: " First Solar Q2 : Solid, No Blowout, Eyes on Malaysia" (FSLR)

They're both from ClusterStock:

The Street is expecting upside in Q2 from First Solar (FSLR) (reporting July 30th, after close), but leave it to Citi to expect even more. After all, FSLR won't hit Citi's $450 price target through garden-variety outperformance:

While the Street is broadly expecting a beat, we think FSLR should deliver enough EPS upside even in spite of what are apt to be lower margins out of the gate given initial under-absorption from the aggressive ramp in Malaysia. Going forward, we think Street models should pull in by nearly a full Q as FSLR is likely to raise full-year shipment guidance...MORE

And:

AmTech's John Hardy remains wildly positive on First Solar (FSLR). He doesn't recommend a trade into earnings (Wednesday, July 30th, after close), but he thinks his long-term thesis is intact: the stock is going to the moon....

...The Bulls Will Point To:

• No silicon constraints as with traditional players.
• Opening of US utility market given low-cost solution....

The Bears Will Point To:

• Limited operating history.
• Must ramp production capacity very quickly in order to fulfill backlog commitments and expectations....MORE

Our thoughts?

First Solar to Beat and Raise, Market Yawns (FSLR)

GE Vice-Chair "Cap-and-Trade is the Way to Go"

Mandy Rice-Davies anyone?
From Reuters:

...But John Rice, a General Electric Co vice chairman, said GE sees cap-and-trade as the way to go.

GE, the second-largest U.S. company by market value, makes both energy-producing devices from equipment for coal plants to windmills and energy-consuming products like jet engines.

"We believe that a cap-and-trade program can provide a reliable market pricing mechanism for carbon," Rice said....MORE

Keep an eye on Mr. Rice:

Will John Rice take over GE from Jeff Immelt?

Crude Oil and Natural Gas Prices Reliably Intertwined?

The next two home heating seasons are shaping up to be financially brutal for homeowners. Heating degree days will be colder than the thirty year average and any disruption in natural gas supply will have us at $20.00 gas by Dec. '09. There's a reason we posted "Centaurus, Carlyle Carve Gas Caverns as Traders Bet Prices Rise" and:

From our Aug. '07 post, Investing in Natural Gas:

Natural gas futures are down.
The September contract is trading at $5.82 down 21 cents.
The January '08 was $8.20. If you know anyone with (large) gas storage capacity (besides Uncle Dave on a fishing trip) drop me a line....

From CXO Advisory:

Reader Henry Bee of Vancouver, Canada asks:

"You have probably heard of the historical 6:1 crude oil/natural gas price ratio. This relationship is said to be mean reverting based on the thermal equivalence of the two commodities. Does this ratio have any predictive power for the future prices of oil or natural gas? If there is no predictive power for this ratio, then it could mean that the thermal equivalence itself shifts over time. And hedge funds who are long natural gas right now are making a huge fundamental mistake."

If there are relationships, we hypothesize that a high (low) crude oil-natural gas price ratio should predict a future increase (decrease) in the price of natural gas and/or a future decrease (increase) in the price of crude oil. Using the monthly composite U.S. refiner cost of crude oil (nominal dollars per barrel) and the monthly U.S. wellhead natural gas price (nominal dollars per thousand cubic feet) for January 1976 through April 2008 (388 months), we find that...

The following chart plots the crude oil-natural gas price ratio over the entire sample period. Visual inspection reveals no reversion level and no regular cycles. The range of the ratio is roughly 5 to 20....MORE

Oil accelerates losses as dollar rises vs. rivals. And: Cramer on BloggingStocks: Not buying the oil/dollar story

First up, from MarketWatch:

Crude-oil futures accelerated their losses Tuesday, as the U.S. dollar strengthened against other major currencies, pressuring dollar-denominated oil prices.

Crude oil for September delivery dropped $3.43 to $121.30 a barrel on the New York Mercantile Exchange.

On the currency markets, the greenback rose against most of its major rivals, with the dollar index gaining 0.8% to 73.26....MORE

From Blogging Stocks:

TheStreet.com's Jim Cramer says don't blame the currency, it's all about supply and demand.

The dollar.

How often do we hear that this currency as the culprit of the m.o. of everything that the "sophisticated" types think is happening. It is almost conspiratorial:

• the Fed raises rates;
• commodity prices come in because they are a hedge against the weak dollar;
• oil fluctuates in price because of the dollar;
• the dollar controls stocks and bonds.

I am not an unsophisticated player....MORE

Lithium-Ion Batteries for Less

From MIT's Technology Review:

Researchers show a low-cost route to making materials for advanced batteries in electric cars and hybrids.

A new way to make advanced lithium-ion battery materials addresses one of their chief remaining problems: cost. Arumugam Manthiram, a professor of materials engineering at the University of Texas at Austin, has demonstrated that a microwave-based method for making lithium iron phosphate takes less time and uses lower temperatures than conventional methods, which could translate into lower costs.

Lithium iron phosphate is an alternative to the lithium cobalt oxide used in most lithium-ion batteries in laptop computers . It promises to be much cheaper because it uses iron rather than the much more expensive metal cobalt. Although it stores less energy than some other lithium-ion materials, lithium iron phosphate is safer and can be made in ways that allow the material to deliver large bursts of power, properties that make it particularly useful in hybrid vehicles.

ndeed, lithium iron phosphate has become one of the hottest new battery materials. For example, A123 Systems, a startup based in Watertown, MA, that has developed one form of the material, has raised more than $148 million and commercialized batteries for rechargeable power tools that can outperform conventional plug-in tools....MORE

First Solar to Beat and Raise, Market Yawns (FSLR)

UPDATE below
At least that's what the stock was saying today. Up $4.44 on a down 2% day. They report after the close Wednesday.
Sometimes it seems that the action is singing to you.
Note the sweet moves of the youthful Mr. Ahearn, before he is directed by counsel to resume insider sales.
(@1:45).
Here's We Got the Beat




Remember that we have seen three reports* that were followed by downticks and believe it is the new trend in solar. "Evergreen Solar Q2 In Line, But Shrs Fall On Light Outlook (ESLR)"

*SPWR-beat
ESLR- in line
MEMC- swing and a miss.
All three down. As grandmother used to say "Secular bear markets aren't just about declines [although they can be doozies], they're also about multiple contraction."

"Grandma, what's a doozie?"

Update: Here's a headline from Tech Trader Daily, great minds and all that:

July 28, 2008, 7:26 pm
Atheros: Beat-And-Raise Qtr; Stk Off On Margin Worries

Mosaic Quadruples Fiscal 2008 Fourth Quarter Net Earnings Over Year-Ago Quarter, Market Yawns

From the press release:

The Mosaic Company (NYSE: MOS) announced today net earnings of $862.5 million, or $1.93 per share, for the fourth quarter ended May 31, 2008. These results compare with net earnings of $202.6 million, or $0.46 per share, for the quarter ended May 31, 2007. Net earnings for Mosaic's fiscal year ended, May 31, 2008, were $2.1 billion, or $4.67 per share, compared with $419.7 million, or $0.95 per share, in fiscal 2007.

Net sales in the fourth quarter of fiscal 2008 were $3.5 billion, an increase of $1.8 billion, or nearly double the amount posted in the same period a year ago.

Mosaic's gross margin for the fiscal 2008 fourth quarter was $1.3 billion, or 37.1% of net sales, compared with $456.2 million, or 27.1% of net sales, a year ago. Fourth quarter operating earnings were $1.2 billion, compared with $359.8 million for the fourth quarter in fiscal 2007. Financial performance continued to benefit from strong agricultural fundamentals and customer demand that drove significant increases in selling prices. Mosaic also had effective operational performance and the Offshore segment results benefited from positioning of lower cost inventories. These positive factors were partially offset by significantly increased Canadian resource taxes and royalties in the Potash segment, and by higher raw material costs for sulfur and ammonia in the Phosphates segment....MORE

The stock was up $0.33 in after-hours trading.

From MarketWatch:

...Analysts surveyed by FactSet Research had predicted the Plymouth, Minn.-based fertilizer and feed company would earn $1.65 a share on $2.81 billion revenue. Mosaic shares rose 0.5% ahead of the report to close at $122.66

Best value beaten-up commodity stocks

From the Financial Post:

Crude oil has fallen as much as 15% from its peak, natural gas has lost a third of its value and gold has dipped more than 7%. Energy and materials stocks in the Canadian equity market meanwhile, have taken part in the downtrend with declines of 19.3% and 15.4% from their recent peaks, respectively.

But they failed to fully engage in the upside for commodity prices during the second quarter, Merrill Lynch Canada strategist David Wolf said in a recent report titled “Commodity stocks if the run isn’t done.”

He expects further weakness in these sectors going forward, which is a primary reason for his bearish call on the S&P/TSX composite index.

However, Mr. Wolf said he continues to hear from international clients looking for an entry point into Canada’s commodity boom.

So since not everybody is as bearish as Merrill, they thought it was worth a look at the TSX materials and energy sectors for stocks that are off more than 20% from their peaks, are Buy-rated, and have better-than-average earnings momentum....MORE

Bottom fishing in India: In the footsteps of George Soros

From BloggingStocks:

"While most funds have been dumping stocks in India's sliding market, billionaire global investor George Soros has turned contrarian on India," says international expert Nick Vardy who now suggests "bottom fishing" in India.

In his Global Bull Market Alert, he explains, "One of the best ways to follow in his footsteps are by purchasing the WisdomTree India Earnings ETF (NYSE: EPI)."

"According to the Times of India, the Hungarian born Soros -- who since last August is again actively managing his famed Quantum fund -- recently went on a buying spree in India making investments valued at $140 million in a wide range of Indian companies....

..."According to Lipper Analytics, three India-focused funds rank among the 10 worst-performing funds globally in May. Stories about India's much vaunted middle class and the country's outsourcing prowess have evaporated from the global financial press virtually overnight....MORE

T. Boone Pickens to kick off “Pickens Plan” speaking tour...

...in Topeka Wednesday afternoon, July 30th, Heritage Hall of the Expocenter.

Maril Hazlett of the Climate and Energy project is trying to keep the economy of eastern Kansas from coming to a halt:

...Come one, come all. Presuming you have no conflict with work.

Here's her post at the CEP blog.

Iran's President Says Oil Prices Are 'Not Realistic'

From CNBC:

World oil prices are overvalued and "not realistic" because the market is being manipulated, Iranian President Mahmoud Ahmadinejad said in an exclusive interview with NBC News.
"The market should be free and these commodities should compete in a free setting," Ahmadinejad told NBC's Brian Williams in a taped interview in Tehran....MORE

"Good morning Brian, death to Israel"

Here's the video*.


* Mr. A. didn't really begin with "Good morning Brian, Death to Israel" He did, however, say "nuclear weapons are so twentieth century". Watch the video, something big is going on here.

Lazard's Strong Defense of Capstone Turbine (CPST)

Here's the story in reverse chronological order.
From 24/7 Wall Street:

If you trade small-cap alternative energy (or less-brown energy stocks) , then Capstone Turbine Corp. (NASDAQ: CPST) has likely come across your desk. Despite a recent pounding with a 35% pullback, shares are still up nearly 200% from last year's lows.

We noticed a severe volume alert yesterday morning at Volume Spike which appears to be twofold with a market drop and lower energy prices and on what may have been an institution lightening up on its shares.

Today we have Lazard Capital Markets analyst Sanjay Shrestha coming to the defense of Capstone Turbine. Shrestha notes that yesterday's (and recent days) sell-off on macro events alone with a volatile energy market gives an opportunity for new funds to get into the stock....MORE

From FoxBusiness, the day before:

Capstone Turbine Corporation Addresses Statements Made in Interview with Bloomberg Reporter

...an interview with Darren R. Jamison, the Company's President and Chief Executive Officer....

The Bloomberg article, published on July 21, 2008, quotes Mr. Jamison as saying that sales estimates in the mid-$50 million range for the fiscal year ending March 31, 2009 "are very obtainable and reasonable." The article also quotes Mr. Jamison as stating that the fiscal year ending March 31, 2012 "is a reasonable date" for the Company to achieve an annual profit. Mr. Jamison's comments were in response to questions about an analyst's specific financial model indicating a revenue target in the mid-$50 million range for the year ended March 31, 2009 and profitability in 2012. The comments were not intended to represent management's financial projections or outlook in general.

The Company does not publicly disclose its internal financial projections....MORE

And the Bloomberg article that started it all:

Capstone Turbine Targets Profit by 2012, Chief Says

Capstone Turbine Corp., whose miniturbine powers buses being tested by New York City Transit as a fuel-efficient alternative, may boost sales 66 percent this year and be profitable by 2012, Chief Executive Officer Darren Jamison said....MORE

Seeing is believing: Could the oil crisis be triggered by images of Greenland’s crumbling ice cap?

A Robert Shiller Commentary from Project Syndicate:

Could the television image we’ve all seen of the Greenland ice cap crumbling into the ocean because of global warming somehow - indirectly and psychologically — be partly responsible for high oil and other commodity prices? The usual explanation of today’s scarcity and high prices focuses on explosive growth in emerging countries, China and India in particular, whose demand for scarce resources is “insatiable.” But psychology also matters in speculative markets, and perhaps that image of the Greenland ice disappearing makes it seem all too plausible that everything else- land, water, even fresh air - is running out too.

Let’s take a case study, the last generalised boom-bust cycle in commodity prices, which caused these prices generally to rise (more or less) from some time in the 1960’s until the 1980’s, and then generally to fall until the mid-1990’s. Maybe images matter just as much as substance in explaining that....MORE

HT: Mark Thoma

Alarm raised on EDF bid for British Energy

Britain has serious energy problems, this is just a sideshow.
From the Financial Times:

EDF’s planned takeover of British Energy risks creating serious competition problems in the UK electricity market, rival companies and customers have warned.

A deal that values British Energy’s equity at about £12.5bn ($24.8bn) could be announced this week. It is backed by the UK government, which controls 35 per cent of the company and wants to get the industry moving on building more nuclear power stations.

But electricity companies and industrial users have called for radical changes to protect competitors and consumers. The business and enterprise select committee makes the same call on Monday in its report on energy markets.

An EDF deal would mean “essentially handing the British nuclear industry to the French government”, says Dieter Helm, an energy expert at Oxford University....MOR

E

OIL: SemGroup Co-Founder Speaks Amid Mounting Troubles

Updates here.
From DealBook:

SemGroup co-founder Tom Kivisto this weekend attempted to reassure employees of the embattled company, following his removal as chief executive and president amid investigations by federal regulators and the United States Attorney’s Office.

‘’Tulsa has always rebounded well when bad things happen to one of its corporate citizens,'’ Mr. Kivisto said Saturday at a news conference where he refused to take questions from the media.

‘’With an investigation under way, I cannot answer any of the pressing questions or comment on speculations regarding the SemGroup situation,'’ he said. A full transcript of his statement was published on the Web site of newspaper Tulsa World.

Kivisto added he believes ‘’as the facts and truths surrounding this chain of events are revealed, the SemGroup employees will regain their trust in what they initially believed'’ about the organization.

The comments came one day after Bank of America sued Mr. Kivisto and his trust organization in Tulsa federal court for $12.8 million and interest unpaid on a 2006 loan....MORE

SOLAR: HelioVolt hopes for a fast scale-up with high-efficiency CIGS process

From VentureBeat:

These are heady times for the thin-film solar industry. The sector’s dominant player, First Solar, has been on a tear of late, recently announcing it would build a second 10 megawatt power plant in Nevada, while Miasole, once thought to be ailing, has staged an impressive comeback, raking in an eye-popping $220 million. Nanosolar has developed a new ultra-fast solar cell printer, and even giants like IBM and Applied Materials have gotten in on the game.

In the face of such intense competition, how will HelioVolt, a well-funded outpost of CIGS manufacturing in Texas, fare? The company hopes a new hybrid, super fast CIGS process it has developed in collaboration with the National Renewable Energy Laboratory (NREL), which combines its patented FASST process and NREL’s non-vacuum deposition technique, will help even the odds....MORE

Climate Change Capital Group Acquires US Environmental Consultancy M.J. Bradley & Associates

From the press release:

Climate Change Capital ("CCC") is acquiring the US strategic environmental consultancy, M.J. Bradley & Associates, it was announced today.

The move, for an undisclosed sum, is the latest in a series of strategic moves in the US by the UK based investment banking group and fund manager dedicated to the low carbon economy. These include the acquisition of the business and assets of Quality Tonnes, a carbon project developer, and opening an office in Washington D.C. for policy and market development. CCC's activities include investing, through its Carbon and Private Equity Funds, in companies and projects that help mitigate climate change. CCC manages the world's largest private sector carbon fund....MORE

Funds for Highways Plummet

From the Wall Street Journal:

An unprecedented cutback in driving is slashing the funds available to rebuild the nation's aging highway system and expand mass-transit options, underscoring the economic impact of high gasoline prices. The resulting financial strain is touching off a political battle over government priorities in a new era of expensive oil.

A report to be released Monday by the Transportation Department shows that over the past seven months, Americans have reduced their driving by more than 40 billion miles. Because of high gasoline prices, they drove 3.7% fewer miles in May than they did a year earlier, the report says, more than double the 1.8% drop-off seen in April....MORE

China sends research expedition to Arctic Ocean

And oil has nothing, absolutely nothing to do with it.
From Reuters:

China plans to install its first long-term deep-sea subsurface mooring system in the Arctic Ocean, to monitor long-term marine changes, the Xinhua news agency said on Sunday.

The system will collect data on the temperature, salinity and speed of currents at various depths around 75 degrees north in the Chukchi Sea, where Atlantic and Pacific currents converge above the Bering Strait. That will allow studies of the impact on China's climate of changes in the Arctic, Xinhua said....MORE

Do Renewable Energy Stocks Correlate With Oil Prices?

No.
They do however correlate with the overall equity market, which is why we paraphrase Chairman Mao from time to time:

...The reason, to paraphrase Chairman Mao's statement "The guerilla must move amongst the people as a fish swims in the sea" is that climate/energy investments swim in the larger sea of the markets....

The guys at AltEnergyStocks scare me, I sometimes think they are reading my mind. In May I noted:

AltEnergyStocks comes slamming home with the post I was going to do, but better, backwards and in heels:...

Last week AES did it again. This time Charles Morand beat me to a graphic depiction of recent trends with "Alternative Energy & Conventional Energy: Is An Image Worth A Thousand Words?":

It wasn't long ago that people still believed the price of energy commodities - and crude oil in particular - had a greater impact on alt energy stocks than did general movements in equity markets or even fundamental factors.

The logic went something like this: even though oil and most of the sub-sectors that make up the broad alt energy space (e.g. solar) are not in direct competition with one-another, expensive oil is the number one driver behind governments searching for alternatives to the way we currently meet our energy needs. For a time, this theory may have held true as far as short-term movements in the prices of alt energy stocks went - but is it still the case?

About a quarter of the way through the book Technical Analysis for Dummies, there were no doubts left in my mind that technical analysis wasn't my cup of tea. Nevertheless, I do like data and enjoy looking at charts as far as general trends are concerned. I therefore thought I'd take a look at a few basic charts to see if, at least visually, there appeared to be any relationship between movements in energy markets and movements in alt energy equities....

His conclusion?:

...Of course, nothing conclusive can be drawn from this small exercise, and since I am a bottom-up stock picker I only partially care about what makes the market move in the near-term. My primary interest in doing this was to see if, should we enter into a period of energy price correction, I should keep my eyes open for promising companies that may trade at a discount due to non-fundamental factors (i.e. supply and demand in the market).

From this brief analysis it seems as though I might be better off with continued troubles in equity markets as a whole for finding alt energy bargains.

Go here for the charts and Tom Konrad's comment.