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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Phil's Favorites

Ray Dalio Is Kinda, Sorta, Really Wrong, Part 3

 

Ray Dalio Is Kinda, Sorta, Really Wrong, Part 3

Courtesy of John Mauldin, Thoughts from the Frontline 

Two weeks ago I started a mini-series in the form of an open letter responding to a series of essays by Ray Dalio, the founder of Bridgewater Associates. I wrote here and here that he was kinda, sorta wrong in Why and How Capitali...



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Zero Hedge

Exposing The Fed's False QE/QT Narrative With Its Own Data

Courtesy of ZeroHedge. View original post here.

Authored by Daniel Nevins via FFWiley.com,

“The fact that financial markets responded in very similar ways... lends credence to the view that these actions had the expected effects on markets and are thereby providing significant s...



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ValueWalk

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

 

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

Courtesy of Vikas Shukla, ValueWalk

Pexels / Pixabay

The trend of vegan food has been gathering momentum in the last few years as people become more health conscious. They have also begun to realize the environmental impact of raising meat for human consumption. According to PETA, it takes an estimated 1...



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Insider Scoop

McDonald's Hit New All-Time High After Quarter Pounder Update, Bullish Rating

Courtesy of Benzinga.

McDonald's (NYSE: MCD) shares hit an all-time high of $206.39 Tuesday afternoon.

On Monday, the fast-food chain announced that after a year of serving fresh beef Quarter Pounders across the United States, the company gained burger share in the "informal eating out...



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Kimble Charting Solutions

Wilshire 5000 Creating A Triple Top? An Important Breakout Test Is In Play!

Courtesy of Chris Kimble.

The stock market has been on fire of late, rallying up to the edge of price resistance on several indexes. Today, we look at one of those stock market indexes: the Wilshire 5000.

The Wilshire 5000 tracks all of the stocks in the US market, so it is a broad-based index that carries significant importance when gauging the health of the overall US stock market.

Looking at the long-term “weekly” chart above, it is pretty clear that the index is at an important price juncture.

The Wilshire 5000 spent the last 25 years trading within a rising price channel (1)...



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Chart School

Formula for when the Great Stock Market Rally ends

Courtesy of Read the Ticker.

When valuations for the boring water company or the boring electric company is trading like your Facebook, Apple, Amazon or Netflix or Google (ie FANG) you know something is wrong.

This is when a seriously over valued market is screaming at you.

Of course the reader must understand in a world where money printing goes super nuts (Zimbabwe style) the stock market may go hyper inflationary and picking a time frame for a top is never a good idea, but we are not there yet. There is no Ben Bernanke helicopter money to the masses yet (ie MMT). 

To see when water company's (and such like) are nearing the crazy FANG like valuations a review of the Dow Jones Utility Index channel shows us how history can repeat. The c...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

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

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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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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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

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.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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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