North Coast Solar Stocks

May 14, 2008

Solar Energy Outshines Rest Of ETF Universe

Filed under: FSLR, JASO, KWT, SOL, STP, TAN, YGE — Tags: , , , , , — Jason @ 6:22 pm

Wednesday May 14, 6:22 pm ET
Trang Ho

An upside earnings surprise from ReneSola (SOL) fueled a sharp rally in solar energy stocks that started Tuesday.Market Vectors Solar Energy (KWT) and Claymore/MAC Global Solar Energy Index (TAN) both gapped up 6%, giving them the best gains among U.S. ETFs.

But neither holds ReneSola, the China-based solar wafer maker.

The 27-stock Market Vectors ETF tracks the Ardour Solar Energy Index, created by Ardour Capital Investments. The 25-stock Claymore ETF tracks the MAC Global Energy Index, created by Melvin & Co., a research firm specializing in clean energy. Both ETFs launched in April with an expense ratio of 0.65%. They have overlapping holdings and use a modified cap-weighting system. So the primary difference is how much of each stock they own.

Ardour Vs. MAC Index

Top holdings in Market Vectors, Arizona-based First Solar (FSLR), Norway-based Renewable Energy, and SolarWorld and Q Cells, both from Germany, are each weighted at 10% of assets. Chinese solar firms, JA Solar (JASO), Suntech Power (STP), Yingli Green Energy (YGE), each have 5%.

In the MAC index, the largest holding, First Solar, takes up 9% of assets, followed by Renewable Energy 7.6%, Q-Cells 6.6%, Suntech 6% and SolarWorld 5.4%. JA Solar and Yingli are both weighted about 5%.

The top countries in both funds are China, Germany and the U.S., followed by Norway.

First Solar made a new high Wednesday after breaking out of a four-month cup base. It appears to have formed a high handle with a new buy point 20 308.34.

Citi Investment Research initiated coverage last week saying First Solar is one of the few companies that will weather a sharp decline in prices. Earnings vaulted 275% to a whopping 717% the past four quarters. Sales exploded 177% to 290% over those periods. It has beat analysts’ views the past six quarters.

Chinese Power Plays

Suntech regained its 10-week moving average, but it still is consolidating below the 40-week moving average. It’s 45% below its all-time high of 90 reached at the beginning of January. Although Q4 earnings rose 48% year over year, they missed analysts views.

JA Solar has formed a cup with high handle with a possible 27.10 buy point. It eclipsed a Q1 forecast by 40%. Earnings rose 29% to 300% the past four quarters. Sales, meanwhile, skyrocketed 222% to nearly 400%. “The company has plans for rapid expansion, an excellent silicon position, low processing costs, a strong management team, and a global reputation,” Lazard Capital Markets analysts said in an equity research report. Lazard rates shares as buy.

Yingli reports earnings Thursday. Analysts polled by Thomson Reuters expect earnings to bound 1,700% as sales leap 262%.

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