Posts Tagged ‘Solar’

The Case For Shorting Solar Stocks

The Case For Shorting Solar Stocks (FSLR, STP, YGE, SPWRA)

solar companiesCourtesy of Vincent Fernando at Clusterstock

Industry fundamentals are looking pretty bad for solar.

After enjoying a few years of tight supply, far too much solar production capacity is coming online as a result.

Government policy hasn’t helped either. For 2009, half of total solar production might not even be sold due a change in government policy from a major solar buyer, Spain.

WSJ: Spain accounted for more than 40% of all new solar panel installation globally last year, installing 2.7 gigawatts — five times the 2007 figure — out of a global total of 5.6 gigawatts. According to Spain’s photovoltaic industry association, Asif, the country’s market was worth €16.38 billion ($23.24 billion). This year, with cuts to aid and a more complicated application process, there has been no new installation in Spain.

Other countries are introducing aid to the solar sector, particularly the U.S. But the new U.S. measures aren’t expected to arrive in time to shore up demand this year. And while China has pledged support for the solar industry via economic-stimulus packages, support is likely to primarily benefit its own low-cost producers that have easy access to credit from state-owned Chinese banks.

Even based on bullish Barlcays numbers shown below, supply is likely to oustrip demand by 30-40% for many years. This could collapse prices down to merely the cost of production… or worse.

Sahm Adrangi: Currently, there is too much supply in all the steps. There is too much polysilicon. There are too many wafers. There are too may solar cells and there are too many modules. The oversupply began in 4Q08, and has only become more exacerbated as time has gone on. Polysilicon prices have crashed from about $400/kg to about $70/kg. Marginal cost is estimated to be around $35 to $45/kg, and I’ll bet that prices will get there soon enough.

Solar Oversupply

Perhaps companies such as Suntech (STP), Yingli (YGE), SunPower (SPWRA), and even First Solar (FSLR), despite its technology advantage, could be in for a long, nasty price war.

 


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Why First Solar Faces A Tough Future

Why First Solar Faces A Tough Future (FSLR, STP, TSL)

Courtesy of Jay Yarow at Clusterstock, Green Sheet 
 

 

 

 
 


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Will We Hold It Wednesday? My Rangeish Outlook

What a pretty picture "THEY" painted yesterday! 

I titled yesterday's post "8,900 or Bust" and it did look like a bust around lunch as we tested our hold targets of Dow 8,800 (8,811 was the low), S&P 946 (944), Nas 1,860 (1,892), NYSE 6,200 (6,084) and Russell 530 (518) but, just after 1pm, a miracle occurred and the buy programs kicked in, leading to an absolutely frenzied finish that brought us right around our upside targets of Dow 8,878 (finished at 8,915), S&P 956 (954), Nas 1,909 (1,916), NYSE 6,231 (6,154) and Russell 535 (525). 

Both the Russell and the NYSE were pumped up near their breakout targets first thing in the morning but both failed there and both broke below "must hold levels."  Keeping an eye on our levels allowed us to make bullish plays on ZION (hedged to $10.16 and another at $9), IWM (that one stopped out), C (bull call leaps) and CAL (hedged to $7.50).  We also added more YUM calls in our $5,000 Virtual Portfolio as well as a bearish ratio backspread on WFC, expecting them to have rough internal numbers, as are many banks this Q (something that kept us from being too bullish overall).  We covered all this bullishness by half uncovering our long DIA puts, still wary of a pullback but ready to re-cover (flipping bullish) if the Dow holds the nonsense move they made into the close.  As I said yesterday – keep up the nonsense for a couple of days in a row and it starts looking like firm support. 

Eps beat rate   BespokeAs we were discussing in Member Chat last night, perhaps it's not all nonsense.  Take a look at this visualization of earnings beats by Bespoke.  I said back when we went bullish two weeks ago that we need 66% of the S&P to beat estimates in order to sustain a rally and we are now well ahead of that pace with almost 72% of the reporting companies coming in BTE.  How bearish can you be in the face of such overwhelming results?  Yes the expectations were low and yes the "beats" are still coming in with revenues that are about 20% or so lower than last year but 20% is not 40%, and that's how far off the top our markets still are.  These numbers are market FACTS, as opposed to the rumors and panic…
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Cautious About First Solar

Analysts Sound Cautious About First Solar (FSLR)

Jay Yarow at the Green Sheet of ClusterStock

First SolarFirst Solar (FSLR) gave an "impressive" presentation yesterday at its investor/analyst meeting about the future of its business, but it wasn’t enough to make analysts feel better about the stock.

We’ve received analyst reports morning from FBR, Deutsche Bank and Cannaccord Adams. Here’s their summaries:

Canaccord Adams downgraded from Buy to Hold with a $180 price target with a 25x multiple of its 2009 EPS estimate.

IMPACT: Modestly negative. First Solar remains the leading solar company, in our opinion; however, the company issued fairly ambitious targets with respect to the project pipeline and technology advances, and a lack of visibility into further positive catalysts remains. Additionally, the company’s business model and financial model are changing fairly significantly. As we suspected, the company’s new focus will lower GMs but likely increase income in absolute terms. While the company has finally properly set expectations, we believe that the decreasing margin profile may turn some investors off until the higher income and cash flows actually materialize.

FBR has an underperform rating with a $110 price target with 5X EV/sales and 12x EV/EBITDA, versus the its peer group (SPWRA, STP, TSL, YGE) average of 1.5x EV/sales and 8x EV/EBITDA.

We walked away from the First Solar (FSLR) analyst event impressed with the quality of presentation and the company’s long-term vision, which was communicated clearly, We continue to believe that First Solar is among a few industry leaders that have sound long-term and short-term strategies based on the realities of the industry. However, in light of the fact that the company has now publicly acknowledged that the business model is changing (revenue mix has changed from one item to three separate items), we think there is an increased probability of a capital increase (to beef up the balance sheet), while challenges remain in the near term (excess inventories, customer insolvency, tight credit market) that are the most important factors, which, in our view, will pressure the stock for the remainder of CY09. Additionally, we walked away feeling incrementally confident that the consensus estimates are too aggressive and do not reflect the realities of the industry.

Deutsche Bank maintains its hold rating raising its price target to $170 from $167, with a 20x C2010 EPS valuation.

First Solar entering a transitional period…
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Are Environmentalists Out To Get First Solar? (FSLR)

Courtesy of Jay Yarow at ClusterStock

Are Environmentalists Out To Get First Solar? (FSLR)

A private citizen told California investigators to check out the land rights First Solar said it acquired when it paid $400 million in stock for OptiSolar’s project pipeline. When the deal was announced, First Solar said it received "strategic land rights of approximately 136,000 acres." In reality, OptiSolar only had applications for the land rights.

Applications are considerably less valuable. If First Solar labeled those applications as assets, and priced them into the acquisition, then the company may be in violation of the law. At this point, it’s unclear if First Solar did or did not label them as assets. It’s also unclear if it’s illegal to price them into the deal, reports Dow Jones.

In spite of the haze around this minor infraction, it’s receiving a decent amount of coverage. Major news outlets are reporting on it as well as most energy/solar focused blogs.

Our intial reaction was that this was much ado about nothing. The Bureau Of Land Managment in California is worried about speculators paying for applications, holding them, then selling them to developers at higher prices. We don’t consider First Solar a speculator, so we thought it was long shot that they were violating the law.

While developing a project is not First Solar’s typical operating pattern, it is a direction the company is heading. In the relase announcing the OptiSolar acquisition, First Solar mentioned other construction projects it was working on. For this reason, we don’t think First Solar plans on just selling off its application permits.

We are curious about the identity of the "private citizen" that tipped investigators. After news broke that First Solar was under investigation, Earth2Tech reported that:

A couple weeks ago we received an email query from an exec at an environmental group wondering about the legality and ethics of solar maker OptiSolar incorporating yet-to-be-approved Bureau of Land Management land applications into its price when solar giant First Solar agreed to acquire the thin-film PV company back in March. I’m not sure how legal it is, I told him, but I would assume


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Chinese Solar Companies In Trouble

Courtesy of Jay Yarow.  Jay covers green tech for The Business Insider - the Green Sheet.

Chinese Solar Companies In Trouble (STP, SOLA, LDK)

Even with billions in subsidies to float the Chinese solar industry there is considerable worry amongst investors:

  • Suntech (STP) investors concerned about customer relationship
  • Suntech shares fall 15 percent
  • Renesola (SOLA) cuts 2009 revenue view, stock down 11.6 pct
  • LDK (LDK) sees thin margins until market improves

By Matt Daily and Nichola Groom, Reuters – Chinese solar companies Suntech Power Holdings Inc, ReneSola Ltd and LDK Solar gave gloomy outlooks on Thursday as the credit crisis chokes off funding for renewable energy projects, and their shares fell sharply.

Solar manufacturers have been hit by the sharp decline in prices for photovoltaic products because the credit crunch is forcing new projects to be put on hold at the same time that new supplies are coming on the market.

Suntech, China’s largest solar panel maker, reported a surprise quarterly profit but disappointed investors when it revealed that Global Solar Fund, a customer in which it has a majority stake, accounted for more than 30 percent of first-quarter sales. Its shares fell 15 percent.

Global Solar Fund invests in companies that will own or develop solar projects, Suntech said.

"Suntech selling to a company that in turn sells to related companies can result in channel stuffing/earnings ‘massaging,’" Oppenheimer analyst Sam Dubinsky, who has an "underperform" rating on Suntech shares, said in a client note.

Suntech — based in Wuxi, China — also cut its shipment forecast for the year and said it will issue 20 million new shares, a move that will dilute its earnings per share. [ID:nBNG24881]

Renesola posted a first-quarter net loss and cut its revenue forecast for the year. Shares of the London-listed company fell 11.6 percent to 111 pence [ID:nLL951681].

LDK, which makes solar wafers, reported a wider-than-expected first-quarter loss and declined to update its revenue forecast for the year, citing limited visibility. [ID:nN213015061]

LDK shares fell 6.2 percent in extended trade, however, after the company said margins would remain thin as prices on its products continue their fall and remain in line with its polysilicon and other costs.

"They just don’t have any margin, and it’s hard to see how they are going to get any margin in the next couple of quarters," said Soleil Securities analyst Paul Leming, who


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The Technical Traders

Massive Price Reversion May Be Days or Weeks Away

Courtesy of Technical Traders

Our researcher team believes a massive global market price reversion/correction may be setting up and may only be a
few days or weeks away from initiating. 
Our team of dedicated researchers and market analysts have been studying the markets, precious metals, and most recently the topping formation in the ES (S&P 500 Index).  We believe the current price pattern formation is leading into a price correction/reversion event that could push the US major indexed lower by at least 12 to 15%.

Historically, these types of price reversion events are typically considered “price exploration”.  Over time, investors push a pricing/valuation bias into the ma...



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Zero Hedge

Jeffrey Epstein Paid Doctors To Drug 'Sex Slaves': Report

Courtesy of ZeroHedge View original post here.

Victims of dead pedophile Jeffrey Epstein say he paid doctors and psychiatrists to dope them up with anti-anxiety and antidepressant medications, according to a new report in the Miami Herald

"There were doctors and psychiatrists and gynecologist visits. There were dentists who whitened our teeth. There was a docto...



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Insider Scoop

Notable Insider Buys In The Past Week: AbbVie, Kraft Heinz And More

Courtesy of Benzinga

Insider buying can be an encouraging signal for potential investors.

A packaged food giant and two drugmakers saw notable insider buying activity this past week.

Some of this insider buying occurred alongside insider sales.

Conventional wisdom says that insiders and 10% owners really only buy shares of a company for one reason — they believe the stock price will rise and they want to profit. So insider...



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Phil's Favorites

Peloton IPO Guide... And Why It Makes No Sense

Courtesy of ZeroHedge

By Scott Willis via Grizzle.com

BOTTOM LINE

At the end of the day, Peloton is a gym membership pretending to be a tech company.

We fully admit the product is exciting and unique in the market, but Peloton still faces the same problem...



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Digital Currencies

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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Kimble Charting Solutions

India About To Experience Major Strength? Possible Says Joe Friday

Courtesy of Chris Kimble

If one invested in the India ETF (INDA) back in January of 2012, your total 7-year return would be 24%. During the same time frame, the S&P 500 made 124%. The 7-year spread between the two is a large 100%!

Are things about to improve for the INDA ETF and could it be time for the relative weakness to change? Possible!

This chart looks at the INDA/SPX ratio since early 2012. The ratio continues to be in a major downtrend.

The ratio hit a 7-year low a few months ago and this week it kissed those lows again at (1). The ratio near weeks end is attempting to...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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