North Coast Solar Stocks

December 7, 2009

Solar ETFs Rally As Climate Talks Start

Filed under: FSLR, JASO, KWT, SPWR, STP, TAN, TSL — Tags: , , , , , , — Jason @ 6:48 pm

By Trang Ho
6:48 pm EST, Monday December 7, 2009

Solar energy stocks led the market higher Monday on several analyst upgrades. In addition, the U.N. Climate Change Conference in Copenhagen, kicked off and the Environmental Protection Agency reported greenhouse gases are endangering people’s health and must be regulated.

Claymore/MAC Global Solar Energy (TAN) rose 3% to 10.07 in a little less than average volume. Shares broke above their 50-day moving average last week in scant volume.

The ETF has traded in a price channel between 8 and 11 for the past seven months. It has returned 27% year to date vs. 22% for the S&P 500. It carries Relative Strength and Accumulation/Distribution Ratings of 54 and B-.

Market Vectors Solar Energy (KWT) surged 4.7% to 15.31 in higher than usual volume. Shares have traded in a sideways band between about 12 and 16 for the past six months.

KWT has gained 18% this year. Its 44 RS and B- Acc/Dis Ratings are technically weaker than TAN’s.

“If both TAN and KWT break out above the channels they are trading in, then expect them to move to the price level of the recent high,” said Tom Bulkowski, a technical analyst and founder of “That means TAN could run to 11.50 and KWT to 18.”

Industry Developments

Barclays Capital upgraded JA Solar Holdings (JASO), SunPower (SPWRA, SPWRB) and Suntech Power Holdings (STP) Monday to overweight from equal weight. The three companies popped 10% to 12% on the news.

Suntech Power said last week it won a 17-megawatt supply contract for 2010 from a Canadian firm. Its shares have spiked 68% year to date.

A top holding in both ETFs, First Solar (FSLR), added to last week’s gains and closed at 135.05 in average volume. The stock has been trending lower, forming lower lows and lower highs, since May. It trades below both its 200- and 50-day moving averages. It is flat for the year.

Shares rallied Thursday. They continued higher Friday after Collins Stewart upgraded the stock to buy from hold. Pricing pressures in the solar market eased in recent months and demand is beginning to pick up, analyst Dan Ries wrote in a client note. First Solar fared better than its competitors during the recession because its cadmium-telluride panels are cheaper to make than the silicon-based ones that dominate the market.

But Theodore O’Neill, a green technology analyst at Kaufman Bros., issued a sell rating on First Solar shares the same day.

“First Solar was built as one of the more successful alternatives that were spawned when polysilicon, which First Solar doesn’t use but everyone else does, was in short supply and expensive,” O’Neill wrote in an equity report. Falling polysilicon prices gave way to lower solar panel prices, which cut into First Solar’s advantage and gross profit margins, he added.

Analysts polled by Thomson Reuters expect First Solar’s earnings to drop 7%-27% over the next four quarters. Sales are seen growing 9%-33% over those periods.

China-based Trina Solar (TSL) said last week it struck a deal to supply about 8 megawatts of photovoltaic modules in China. It also received government approval for a project of about 2 megawatts under the Golden Sun program, which aims to install about 20 megawatts of solar power capacity in every province in the country.

High Ratings

Trina shares have rocketed 460% this year. Its RS and EPS Ratings of 98 and 79 are the highest combined of all solar energy stocks. It also outshines with a robust A Accumulation/Distribution Rating and Up/Down Volume Ratio of 1.7. Consensus analyst estimates project 33% EPS growth in 2010.

Chinese solar stocks have outperformed their U.S. counterparts this year on news that the country plans to more than double its environmental protection spending through 2015 as well as cut its carbon footprint by 40%-45% from 2005 levels by 2020.

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