North Coast Solar Stocks

August 21, 2008

Solar ETFs Warm Up As Oil Prices Recover

Filed under: GEX, KWT, LDK, PBW, PUW, QCLN, SPWR, STP, TAN — Tags: , , , , , — Jason @ 6:28 pm

Thursday August 21, 6:28 pm ET
Trang Ho

Solar energy ETFs heated up this week as companies beat Wall Street earnings estimates, and oil prices climbed higher.

So far this week, Claymore/MAC Global Solar Index (TAN) rose 6.7% to 25.73. But it hangs 16% below its high.

Market Vectors Solar Energy (KWT) rose 7.3% to 39.31 and trades 13% below its high. They both cleared their 10-week averages for the first time in two months. They debuted in April with similar holdings and since have formed similar chart patterns. The former owns a slightly higher Relative Strength Rating of 60 vs. 54 for the latter.

Market Vectors-Global Alternative Energy (GEX) has the highest RS Rating among alternative energy ETFs. It rose 6.1% this week to 52.01 and cleared both its 50-day and 200-day moving averages.

First Trust Nasdaq Clean Edge U.S. (QCLN), PowerShares WilderHill Progressive Energy (PUW) and PowerShares WilderHill Clean Energy (PBW) are trading far below their long-term averages and so their charts still look bearish. They’ve trended in a sideways range since the beginning of July.

Strong Global Demand

Suntech Power (STP), a major holding in all of these except the WilderHill ETF, blasted 19% in two days to 44.70 in heavy volume. The Chinese solar cell maker increased earnings 41% from the year-ago period to 41 cents a share, 28% above estimates. Sales jumped 51% to $480 million. Earnings popped 48% to 75% the three prior quarters. Sales leaped 76% to 137% over those periods.

Citing the company as “financially, strategically and fundamentally superior to the other China/Taiwan-based PV-cell/module makers,” an analyst with Daiwa Institute of Research, based in Hong Kong, upgraded the stock to outperform. For 2009, strong demand from Germany, Italy, Korea and the U.S. will offset weakness in Spain, wrote Pranab Kumar Sarmah in a client note.

Raised Guidance

Suntech said it expects Q3 revenue to fall between $570 million and $580 million. Analysts polled by Thomson Reuters expected $524.6 million. It raised fiscal 2008 revenue guidance from $1.9 billion to $2.1 billion to a range of $2.05 billion to $2.15 billion.

LDK Solar (LDK) also raised guidance when it announced Q2 results last week. It expects $486 million to $496 million in revenue for Q3. It sees $1.65 billion to $1.75 billion in sales for fiscal 2008. That dwarfed analysts’ estimates of $313 million and $1.16 billion for those periods. It topped Q2 earnings projections by 207%. Earnings erupted 378% from a year ago to $1.29 a share. Sales rocketed 346% to $441.7 million.

SunPower (SPWR) guided Q3 results in line with analysts’ views. But it raised its outlook for 2008 and 2009. It also eclipsed Q2 estimates. Earnings flew 144% to 61 cents a share, nearly 20% above views. Sales burst 120% to $382.8 million.

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