Solar Stocks – SunPower
It’s official now. The solar industry is hotter than hot and greener than green. Everyone on Main Street is talking about solar power. Everyone on Wall Street is talking about solar stocks. Currently, solar energy represents less than 1% of total energy production in the United States. Yet this advanced technology is being trumpeted as a long term savior of the clean energy industry.
There are a number of publicly traded companies that serve the solar market– making everything from solar cells to modules. These companies are based around the world from Germany to the United States and China. Recently, many of these solar companies have made their investors huge profits.
SunPower (SPWR), which is headquartered in the US and has a major manufacturing facility in Asia, was originally founded as a division of Cypress Semiconductor (CY). SPWR has grown their manufacturing capabilities by leaps and bounds and recently announced the construction of three new solar electric power plants in Spain.
In the middle of October, SunPower announced their third quarter results, which were nothing short of phenomenal. Shortly after the announcement the stock rallied more than 8%, and was up 25% in the next 5 days.
But that wasn’t all. . . .
A few weeks later First Solar (FSLR) had its time in the sun, posting very good third quarter earnings. They announced that they’re ramping up production at their German manufacturing facility. In addition, they are going to build a fourth plant in Malaysia which is expected to start production in the second half of 2009.
Based on this good news, First Solar’s stock rallied more than 30% in a single day.
So now the question is “who’s next”?
Suntech (STP) has plans to announce their earnings on Thursday, November 15, at 8:00 am EST. Suntech is the largest provider of solar cells in the world. They have more than 4,000 employees and 4 different production facilities all located in China.
The company went public in December of 2005 and has had a tremendous run in its stock price. Solar companies are drawing lots of attention these days, and it’s due in no small part to a worldwide demand for solar energy. Building on this increased demand, and the good news already in the markets I believe that Suntech has a good chance to report an outstanding number.
Anticipating that the Suntech quarter is similar to what SunPower announced a few weeks ago, or what First Solar announced last week, we can expect this stock to move significantly in the very near future. To capture this volatility, we are looking at purchasing some call options, or establishing an option spread on the stock.
As with any trade, do your own diligence, and don’t forget to use proper stop loss and position sizing, as appropriate.
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