Solar Stocks Are Heating Up

| November 19, 2009 | 0 Comments

Solar stocks are starting to show some upside momentum.  A brighter demand outlook and better than expected earnings are breathing life into the sector.

And, I’ve found three beaten down solar stocks ready to rebound.  (I’ll give you all the details in a moment…)

Improving business conditions are welcome news for the beleaguered solar industry.  Solar companies have been under heavy pressure all year long.

A huge oversupply of solar panels has been driving prices into the ground.  And, the supply glut has crimped sales and earnings.

Share prices have plunged as a result.

Many are down 20% or more since hitting 52-week highs this summer.

KWT is a good proxy for the global solar industry.  It holds positions in 30 solar companies from around the world.  As you can see, it’s down about 21% from the 52-week high it set in June.

However, the winds of fortune appear to be changing for the better.

New research from iSuppli shows business conditions improving for the solar industry.  They’re seeing a big reduction coming in global supply of solar panels.  This will go a long way toward restoring balance between supply and demand.

What’s behind their revised outlook?

Surging demand in the German market.  When solar module prices dropped 20% in July, German customers jumped on the attractive prices.  Solar panel installations mushroomed to record levels.

What’s more, if German demand persists, the solar panel supply glut could be resolved as early as next year.  This is big news for the industry.  iSuppli had been forecasting the oversupply situation to last into 2011.

Several solar power companies are already seeing a pickup in demand.

Canadian Solar (CSIQ) says visibility is improving.  Shipments in the third quarter more than doubled.  They’ve received firm purchase orders for December and January.  And, they believe the first quarter of 2010 will be stronger than last year.

In fact, CSIQ expects shipments in 2010 to double this year’s figure.

They see Germany, Italy, and the U.S. driving demand significantly higher.  Plus, they expect strong growth from newer markets like Canada, Japan, and China.

Yingli Green Energy Holding (YGE) is also seeing demand strengthen.

Shipments jumped an amazing 80% in the third quarter.  Management says demand from Europe is far outpacing supply, and the U.S. market is improving.  Plus, they think increasing demand will cause solar panel prices to flatten, or even rise, in the first quarter of 2010.

And just yesterday, Solarfun Power (SOLF) said demand for their solar panels is expanding.  Shipments in the third quarter soared a whopping 145%.  What’s more, they see shipments rising next quarter and in the first quarter of 2010.

But that’s not all…

All three companies reported much improved third quarter results.

At CSIQ, revenue surged 87%, earnings skyrocketed 123%, and both figures handily beat estimates.  YGE’s earnings of 18 cents per share easily topped analysts’ estimates.  And, SOLF’s earnings of 37 cents more than doubled the consensus estimate.

The time is now to establish a position in one or more of these stocks.  CSIQ and YGE are both down more than 60% from their all time highs.  And, SOLF is off 84% from its all time high.

If business improves as they expect, we should see analysts’ estimates move higher.  And you know what that means.  Higher stock prices ahead.

Take a closer look at CSIQ, YGE, and SOLF for your own portfolio.  You don’t want to miss out if these stocks start to make a major move higher.

 

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Category: Commodities

About the Author ()

Robert Morris is the editor of Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market’s next Blue Chips. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics. In addition to Penny Stock Research, Robert also writes frequently for two other free financial e-letters, ETF Trading Research and the Dynamic Wealth Report. He’s also the editor of two highly successful and popular investment advisories, Biotech SuperTrader and China Stock Insider.

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