- by ALAN0701 Warren Buffett-controlled MidAmerican Energy Holdings
announced that it has established a new business arm as a conduit for a deepening of the company's move into the unregulated renewables market
. The new vehicle, MidAmerican Renewables, LLC, will oversee wind, geothermal, solar and hydro projects to produce energy for the renewables market
MidAmerican Renewables will be based in Des Moines, Iowa, and will encompass MidAmerican Wind, LLC; MidAmerican Geothermal, LLC; MidAmerican Solar, LLC; MidAmerican Hydro, LLC; and project development and commercial management.
The company of course already has significant exposure to the wind market and late last year raised eyebrows in the clean energy world by making two significant deals related to two solar farms:
First, MidAmerican purchased 100% of First Solar's $2bn, 550 MW Topaz Solar Farm, in San Luis Obispo County, California. You can read more on that deal here.
Secondly, MidAmerican acquired 49% of NRG Energy's $1.8bn Agua Caliente project in Yuma County, Arizona. You can read more about this second deal here.
We argued at the time that MidAmerican appeared to be suggesting that further deals should be expected. From this perspective, the following quote from the press statement announcing the Agua Caliente deal is particularly interesting. Greg Abel, chairman, president and CEO of MidAmerican Energy Holdings Company, was quoting as saying:
As a result, since late November we have been recommending being long a basket of three tier one Chinese solar players
- Suntech Power (STP
), Yingli Green Energy (YGE
) and Trina Solar (TSL
). All three have performed well. STP
has by far been the best performer at up 41.5%. TSL is up 23.6% and YGE up 10.76%. We continue to think that this basket should perform from here. China may double its installations of solar panels this year, absorbing excess production that depressed prices and margins in 2011, chief executive officers from two of the industry's top five manufactures said. Suntech Power Holdings Co. CEO Zhengrong Shi estimated the nation may add 4 gigawatts or more of panels, and Trina Solar Ltd. CEO Jifan Gao expects 5 gigawatts. That compares with about 2.2 gigawatts installed in the country in 2011, more than double the capacity of the average nuclear reactor in the U.S. http://seekingalpha.com/article/322744-5-solar-stocks-to-buy-before-the-next-boom-cycle?source=yahoo Solar Outlook Boosts N.Y. Index to 4-Month High: China Overnight http://www.bloomberg.com/news/2012-01-27/solar-outlook-boosts-new-york-index-to-four-month-high-china-overnight.html?cmpid=yhoo
Solar stocks drove Chinese companies traded in the U.S. to a four-month high, after panel manufacturers said the country may double installations this year as the government pushes to consolidate the industry.
The Bloomberg China-US 55 Index of the most-traded Chinese equities in the U.S. gained 1.4 percent to 103.99 at 3:08 p.m. in New York, poised for the highest close since Sept. 15. Trina Solar Ltd. (TSL
) led gainers, adding the most since Jan. 12, while LDK Solar Co. (LDK
) and Suntech Power Holdings Co. (STP) both advanced more than 4 percent. Renren Inc. led a surge in Internet companies on a report that Facebook Inc. may issue shares next week.
Chief executive officers of of Suntech and Trina, China’s largest and fifth-biggest solar panel makers, said the country may install as much as 5 gigawatts of panels in 2012, from about 2.2 gigawatts installed last year. Companies with the best technology and brands will win out in the streamlining of the industry, Trina CEO Jifan Gao said in an interview from the World Economic Forum meeting in Davos, Switzerland.
With German lawmakers negotiating to cut subsidies for solar panel installations, alternative energy investors have been concerned. But some analysts are now seeing an opening in the market, predicting the industry could see a rush of activity after Chancellor Angela Merkel’s coalition failed to agree on an overhaul of the country’s clean energy subsidy system.
A proposal backed by Economy Minister Philipp Roesler to limit total installations and introduce a quick, one-time subsidy cut of about 35% found support in both parties but couldn’t raise unanimous backing, according to a Bloomberg report today.
Solar stocks climbed Thursday after word spread of the turn in events. The broad Guggenheim Solar ETF (TAN
) closed up 2.72% on more than 1.5 times its longer-term average daily volume. Leading names moving up during the regular session included: First Solar (FSLR
), which rose 6%; GT Advanced Technologies (GTAT
), which climbed 1.65%; Trina Solar (TSL), which jumped 1.76%; and JA Solar (JASO
), which rose 7.36%.
Germany last year installed a record 7.5 gigawatts, more than double the government’s target, making the nation the world’s largest market for the technology, according to reports.
The rise by solar today included a 3.18% gain by Suntech (STP
), despite a downgrade by Stifel Nicolaus. The firm’s analysts told clients that STP had run too far, too fast this month. Shares of STP are up 46.6% so far in 2012.”The company is lagging in cost reductions and its historical price premium is at increasing risk relative to its key Chinese peers,” the investment bank asserted. “This, combined with the company’s increasing leverage and continued cash burn, does not warrant a top of the range valuation.” Solar Stocks Down Then Up; Obama Calls For Energy Aid
President Obama talked up the promise of alternative energy in his State of the Union speech Tuesday, and said he'd clear the way to produce clean power on public lands.
But whatever their future, the solar and wind industries — and alternative energy investors — have had it rough lately.
Subsidy cuts around the world have hurt profits, and analysts see a fierce global price war cutting the number of solar material suppliers
For months, IBD's 24-company Energy-Solar industry group has ranked dead last in long-term stock performance among 197 groups tracked.
It's down 60% over the past 52 weeks. But so far this year, those stocks have risen 38% vs. the S&P 500 index's 5% gain. Several are foreign ADRs, and China leads in making silicon solar products — the main type — at low prices
"I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here," Obama said in his speech, as he talked about ending subsidies for oil and broadening incentives for an alternative energy industry "that's never been more promising."
Shares of the 10 biggest solar companies IBD tracks dipped or stayed flat early this week. But nine rose Thursday, and each is up strongly for the month, from ReneSola's (SOL
) 52% gain and Suntech Power Holdings' (STP
) 47% jump down to SunPower's (SPWR
) 10% rise. The largest, First Solar (FSLR
), lifted 21%.
Pichel says the European solar market is in decline but that will be mitigated by China, Japan and U.S. growth. Overall he says the year is shaping up to be "kind of flattish, still dominated by oversupply."
Until the solar and wind industries can thrive broadly without subsidies, changes in perks will affect demand and viability.
"The biggest issue on the federal side is financing and especially extension of the 1603 program," said Rhone Resch, president of the Solar Energy Industries Association. "It expired on Dec. 31 and, unfortunately, this program has done more to expand use of renewable energy than any other in history." http://news.investors.com/Article/599080/201201280208/solar-industry-still-reliant-on-tax-perks.htm?ven=yahoocp,yahoo Can Solar Stocks Continue Their Hot Streak? http://www.fool.com/investing/general/2012/01/27/can-solar-stocks-continue-their-hot-streak.aspx
Travis Hoium January 27, 2012
I almost can't believe my eyes when I look at solar stocks every day. Across the board they've posted solid stock gains since 2012 began, a stark contrast to a dismal 2011.
But sometimes beaten down stocks bounce for no particular reason. This time, that isn't the case for solar stocks, and the drivers of the bounce may be leading to a healthier industry for the long-term. Germany talks, but doesn't cut rates
The short-term driver for solar stocks is a feed-in tariff (FIT) rate in Germany that still has installers rushing to install solar before the rules change. A one-time cut along with a cap on installations was proposed to lawmakers this week, but a deal was never reached. According to analysts, that means capacity of 4 GW can probably be expected in the first four months of this year.
That's a relief for manufacturers like Yingli Green Energy (NYSE: YGE
) , Trina Solar (NYSE: TSL
) , and Suntech Power (NYSE: STP
) who get most of their demand from Germany. These three manufacturers are the top tier of module makers who will benefit from increased sales.
But the leveraged returns in the fourth quarter of 2011 and the first quarter of this year will come further down the supply chain. LDK Solar (NYSE: LDK
) and JA Solar (Nasdaq: JASO
) saw sales and margins tumble in the third quarter of last year because of weak demand, but we're likely in for a big turnaround with this strong demand. If demand is as strong as it appears, top tier suppliers will sell out of modules leaving left over demand for lower tier suppliers. http://www.fool.com/server/printarticle.aspx?file=/investing/general/2012/01/27/can-solar-stocks-continue-their-hot-streak.aspx First Solar
) is based in the United States and is considered by many to be a "blue chip" solar stock thanks to its unique technology and strong balance sheet. This company has been historically very profitable and the shares once traded for over $250 per share in 2008. Now the stock trades below book value, which is $46.61 per share. This company is one of the only ways to play the solar sector if you want American management and a strong balance sheet. First Solar is likely to emerge as a long-term winner and it appears to have already hit rock-bottom. The stock seems to have strong support around $35 per share, so buying dips near that level makes sense. Here are some key points for FSLR
Current share price: $40.94
The 52 week range is $29.87 to $175.45
Earnings estimates for 2011: $5.85 per share
Earnings estimates for 2012: $4.18 per share
Annual dividend: None FSLR
$40.94 charts MEMC Electronic Materials, Inc.
) is a U.S. based manufacturer of silicon wafers for use in computers, solar, and other products. This company has a joint-venture agreement with JA Solar (JASO
) and has been an industry leader in the United States. With a book value of $9.75 per share and a strong management team, this appears to be a lower risk way to play the eventual rebound in the solar industry. MEMC shares have support around the $4.25 range, so buying at that level makes sense. Multiple insiders made substantial purchases of this stock in 2011, and that is a very good sign for a future rebound. Here are some key points for WFR
Current share price: $4.62
The 52 week range is $3.65 to $15.04
Earnings estimates for 2011: 32 cents per share
Earnings estimates for 2012: 28 cents per share
Annual dividend: None Another under-$10
stock that's very close to triggering a big breakout is MEMC Electronic Materials(WFR), which is engaged in the development, manufacture and sale of silicon wafers. This stock is off to a smoking hot start in 2012 with shares up over 20% so far.
If you take a look at the chart for MEMC Electronic Materials, you'll notice that this stock has decimated by the bears from last September when it traded over $7 to its recent low of $3.65 a share hit in December. Since printing that low, the stock found some big buying support at around $3.65 to $3.77 a share, and it has crossed back above its 50-day moving average of $4.21. That move has now put WFR in focus for a breakout trade if the stock can manage to clear some near-term overhead resistance levels.
If you're bullish on WFR, you could be a buyer of this stock once it takes out $4.94 to $5 a share with big volume. Look for volume that's tracking in close to or above its three-month average action of 8.29 million shares. At last check, the stock tapped $5 a share today, but so far volume is well under 8.29 million shares. Traders should now watch WFR for a sustained high-volume move and close over $5. If that move hits soon, then I would target a run back towards $6.50 to $6.91 (its 200-day) a share, or possibly much higher.
Shares of WFR sport a decent short interest, since 6.4% of the tradable float is sold short. The short-sellers have been increasing their bets from the last reporting period by 9.4%, or by about 1.24 million shares. Those new shorts could get forced to cover quickly if WFR takes out $5, so keep this name on your trading radar. WFR
Chinese panel makers like JA Solar (JASO
), Trina Solar (TSL
) and Yingli Solar
) feel confident they will see a doubling of demand in their home market this year,
to 4 Gwatts of capacity. That's out of a total global demand that could be as low as 30 Gwatts (according to Bloomberg) or as much as 35 Gwatts (according to Trina).
This will be good news for those who buy solar ETFs like KWT and TAN, which lost over half their value in the last year. The ETFs are dominated by big Chinese solar players, and last year's plunge in prices (as much as 47% by some estimates) resulted in many panels being "dumped" into other markets, which nearly killed the U.S. industry. http://seekingalpha.com/article/322778-solar-panel-makers-see-demand-moving-east?source=yahoo YGE
$4.54 charts SPWR
$7.25 charts SOL
$2.45 charts JKS
$6.83 charts JA Solar Holdings Company Ltd.
) is one of China's largest manufacturers of photovoltaic solar cells. This company has a relatively strong balance sheet and has seen smaller losses than many of its competitors. The stock is trading way below the book value of $6.35 per share. JA Solar is likely to emerge as a strong company thanks to its reasonable debt load and because of strategic partnerships with companies like BP Solar and MEMC Electronic Materials, Inc. The stock looks very attractive on dips to about $1.50 per share. Here are some key points for JASO
Current share price: $1.75
The 52 week range is $1.21 to $8.57
Earnings estimates for 2011: a loss of 16 cents per share
Earnings estimates for 2012: a loss of 20 cents per share
Annual dividend: none JASO
$1.84 charts Suntech Power Holdings
) is a China-based manufacturer of photovoltaic products. This company was once a solar stock darling, and traded for over $80 per share in 2007, and even over $20 in 2012. Now it trades way below the $8.90 per share book value. Investors are right to be concerned with recent losses and the fair amount of debt that Suntech carries, however, buying on dips now could pay off big if this stock reaches even a fraction of its former highs. This stock appears to have strong support around $2.60 per share, so it makes sense to patiently wait for dips to that level before buying. Here are some key points for STP:
Current share price: $3.24
The 52 week range is $1.70 to $10.83
Earnings estimates for 2011: a loss of about $2.27 per share
Earnings estimates for 2012: a loss of about 82 cents per share
Annual dividend: None STP
$3.49 charts LDK Solar
) is based in China, and it manufactures a variety of solar products. This company has an ambitious CEO and it is able to manufacture polysilicon at very low prices. The scale this company has is a definite edge in boom times, however, it does have a high debt load which does raise concerns. Thanks to what appears to be strong support by the Chinese Government and banks, LDK has been able to successfully manage the debt load. When the solar industry shakeout is over and pricing power returns, LDK could be a big winner. LDK is a leveraged way to play a rebound, but it makes sense to buy on dips to around $4 or less. Here are some key points for LDK
Current share price: $4.65
The 52 week range is $2.55 to $14.97
Earnings estimates for 2011: a loss of $1.05 per share
Earnings estimates for 2012: a loss of $1.22 per share
Annual dividend: none LDK
$4.91 charts TSL
$8.67 charts TAN