Money-Rx Blog

Forbes - Akeena Solar Inc. shares surged 40 percent to a new 52-week high of $11.71 after the Los Gatos, Calif.-based company said it licensed Suntech Power Holdings Co. to distribute its Andalay solar-panel technology in Europe, Japan and Australia. Suntech shares rose $1.49 to $83.81....LDK Solar Co. shares also rose $2.30, or 4.8 percent, to $49.28 after the company issued a profit-margin outlook above Wall Street expectations...Calyon Securities analyst Kelly Dougherty lifted her price target for First Solar Inc. to $345, saying the "best is yet to come." She called the company "an industry leader" because of its products, low costs, high margins and expansion plans.

BusinessWeek - Investors seem to be hopeful that the time has come for solar panels to break out of their niche market and find a wider range of customers...While polysilicon prices continue to keep solar panels out of the price range of most consumers, technological advances that require less of the material to be used and cheaper installation options such as the Andalay technology may spur some customers to be more inclined to give solar power a chance. And if that's not reason enough, rising oil prices may provide an extra incentive.

CNNMoney.com - IBD's Energy-Other group, heavy with solar companies, currently ranks No. 1 of the 197 industry groups tracked. The 75-company group is up 70% since mid-August..."The solar sector has done extremely well," said Brion Tanous, an analyst with Merriman Curhan Ford. "It's seeing tremendous growth." Solar industry sales are expected to jump to $69.3 billion in 2016 from $15.6 billion in 2006, says analyst Tanous....

But when a sector is so white hot, growing up pangs are bound to create speed bumps, and in the case of solar stocks, the bumps are named government funding, China startups and a polysilicon shortage.

First, federal solar tax breaks and research funding are the life blood on which solar companies depend. Without that, most would not exists in the first place. Research funding is very iffy at best, and the tax breaks scheduled to revert back from the current 30% to to 10% on Dec 31st 2008, with no guarantee of another extension. As of now, U.S. based solar startups are more dependant on venture funds for getting a foot in to the market, which naturally puts a crimp on the research and focuses more on cutting costs and posting a profit. That's not a good direction for a new industry still looking to find its legs.

Secondly, every quarter or two, a new solar startup comes out of China with ridiculously low priced products and an IPO which immediately rakes in a billion or more. Examples are Trina Solar Ltd., JA Solar Holdings Co. and Solarfun Power Holdings Co., all of which have a billion plus in capitalization, and none of which were even heard of, or even in the solar business, before 2005. These companies are now hit by supply-demand bottlenecks, a lack of a corporate framework and no growth strategy. It's fair to say that most of these solar stocks are going to end up in the trash can when a crisis hits the sector, which will come sooner or later, most likely in tandem with a crisis in the general economy in either the U.S. or worldwide.

Lastly, a flawed industry-wide solar module production process which depends on polysilicon as the core material. The only companies which managed to beat this rap was First Solar Inc., which uses cadmium telluride, and Ascent Solar, which uses copper-indium-gallium-diselenide. The others are all scrambling to hoard up enough polysilicon to fulfill existing and future order backlogs. Not to put too much emphasis on this, but there's a bit of irony when alternative energy companies hoard up raw material because of a shortage...