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Solar stocks have soared from 2010 to now
Solar stocks have had a rough time, but there has been a dramatic change, and the demand for these stocks has soared. It is expected that the next few months will see some healthy earnings for solar stocks. The strong fears regarding euro depreciation, which has a crippling effect on the sector, have died down and solar trading has picked up strongly over the last month. This article is a continuation from our 2009 article, reasons to begin investing in solar power. To read this article, click here
However, the fear that is associated with the solar sector has yet to let go of its grip. Investors need to focus on future demand and consider whether the solar industry will be oversupplied. It is also important to note that positive earnings from the solar industry are being released, and a series of impressive numbers have been shared.
If oversupply really will be an issue in 2012, it will not really become clear for many months. What we do know is that most of the major players in the solar industry sold-out all of their products prior to end of the year in 2010, and this was reflected by the strong earnings in the following quarters.
This oversupply dilemma for solar investors is by no means new, and it is a common theme in the solar sector. However, it can obscure the very different challenges that individual solar companies have to face.
Let us look at U.S. solar stocks. First Solar (FSLR) can impress with its printed earnings number, as it has done in the past. However for this company it has been more about the margin profile, valuation and future business outlook, than about generating earnings. This company is without doubt one of the strongest in the US solar industry.
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Another company is Evergreen Solar, but this company is bound by fears of bankruptcy. The company will be de-listed from the NASDAQ if its share price does not climb to at least $1.
These two U.S. solar stocks demonstrate the variety of solar stories. From a company which “will surely have another great quarter,” to a company which is “bound by strong fears about impending de-listing and even bankruptcy.”
Overall, the next several quarters are very likely to be extremely strong in terms of demand and probably margin. The solar stocks have had a big run, partly because of the massive demand in 2010, and now they are going to be heavily influenced by the 2011 demand picture. The more bullish investors involved in the solar trade looked for a 15-25% MW growth in 2011 and around 10% price cuts for the year, which would still allow the top cost reducers to have good margins.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.