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From Solar 2009: Investment Opportunities in Solar Stocks, Part 1

Tom Konrad, Ph.D.

The last panel I attended at Solar 2009 focused on investment opportunities in Solar.  This is the first of several entries with ideas from the speakers.   They were:

Each had perspectives on the solar (mostly photovoltaic (PV) industry, and struck me as very knowledgeable in the field.  The caliber of the industry and investment knowledge on display impressed me, so I'll share with readers some of the panelists thoughts.

Peter Lynch on the Solar Sector

  • Wall Street likes “techie glitz” of PV because it means they really don’t have to focus too much on reality.
  • In the last 8 weeks, solar stocks have gained 72% on average.  This is unsustainable.
  • Solar Stocks have a very bright future, but you'd better be a trader.
  • All stocks took off in early march.  When stocks move the good ones move first, and others get swept up.  I believe that the Solar stocks were ones that got swept up. 

Allen Goodman on the Solar Sector

  • There are lots of claims [of low-priced PV modules.]  If they can [produce them at that price], that's great, but the challenge is on the companies.
  • The key to picking profitable solar companies is to look for ones with key differentiating factors.  For developers, this may be the ability to have a relationship with a customer, obtain financing, and do permitting.  The other end of the spectrum is to have an edge with technology.

Investment Action

I agree with Lynch that if you're going to make money in Solar stocks today, you have to do it as a trader.  I also agree that the current move is unstainable (I recently called it a bear market rally.)  So if you are a trader, the trade today should be on the short side.  Future articles in this series will have a couple stocks that the panel panned, or you can short the sector as a whole, with either of the Solar ETFsTAN or KWT.

DISCLOSURE: None.

DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.



was posted on AltEnergyStocks.com.


       

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Comments

I agree on the volatility that will favor the trading approach in the near-term, but I disagree with Peter Lynch that trading around solar names is the best way to make money from this sector.

I loaded up on TAN at $5 and will gladly do so again when we re-test these levels (I agree we are in a bear market rally). My time horizon is 2 to 5 years and I'm willing to be patient...and I think I will make money.

This is a sector with a tremendous amount of growth potential that is in the midst of a shake-out that will likely re-shape it in pretty significant ways. That's why my play is to be long my preferred ETF - and avoid trying to pick winners - and have the patience to ride out the storm.

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