Tax incentives were extended, companies came in with better results than expected, but the sector is one of the main victims of the market and energy retreats. This won’t last though. For those that can look ahead a little bit longer, the case for these stocks is really compelling. And the dollar strength, reason of the latest pull-back, is not likely to last..
Obama Could Energize Solar
Carl Gutierrez, 11.05.08, 9:10 PM ET
- Solar stocks gave up some of the gains they made over the past two days on Wednesday following an unhappy surprise from SunPower, but not due to any worries over the victory of Barack Obama in the U.S. presidential election.
- Many expect his administration will be favorable for alternative energy.
- “People are banking that Obama is going to come through,” said Mark Bachman, an analyst at Pacific Crest Securities.
- Bachman noted that Obama has taken numerous stances beneficial to the solar industry. “He has called for a reduction of carbon emissions, which would push a move to more renewable,” Bachman said. “He has been a staunch supporter of oil independence, which also would translate to more use of renewable energy.”
- Before tapering off Wednesday, solar stocks like First Solar gained 23.5% between Monday and Tuesday, SunPower (nasdaq: SPWR – news – people ) rose 29.3%, and Evergreen Solar (nasdaq: ESLR – news – people ) jumped 39.6%.
- A driver of Wednesday’s fall was SunPower’s warning that the recent gains made by the dollar would hurt earnings in the fourth quarter and upcoming year.
- In a display of shooting first and asking question later, investors sold off solar stocks on speculation of who would be next. Foreign-exchange issues play a major role in shaping the balance sheets of U.S. solar companies due to the importance of the European market.
- San Jose, Calif.-based SunPower said late Tuesday that the dollar’s jump against the euro would cuts its fourth-quarter sales by $17.0 million and its earning by approximately 15 cents per share. For 2009, the euro’s fall will hurt sales by $50.0 million and earnings per share by 50 cents.
- Much of what made SunPower’s announcement so unsettling, Bachman said, was that it came only weeks after the company said it felt confident about its exposure to foreign currency.
- Shares of First Solar dropped 14.3% on Wednesday, Evergreen Solar tumbled 17.0% and SunPower sank 34.7%.
- Chinese solar stocks were also hit, as Suntech Power Holdings (nyse: STP – news – people ) dropped 19.2%, LDK Solar (nyse: LDK – news – people ) fell 10.5%, and JA Solar Holdings (nasdaq: JASO – news – people ) sank 20.7%.