Solar

Solar Stocks in 2008: A Look Back

Well folks, 2008 has FINALLY come to an end. Not many folks I know would list 2008 as one of their favorite years. In fact, 2008 was the worst year for the stock market since 1931 and as the table below clearly shows, solar stocks with their very high beta’s* did about twice a poorly as the general market.

Symbol

Company Name

2008 Performance %




AKNS

Akeena Solar, Inc.

-78.4

ASTI

Ascent Solar Technologies, Inc.

-84.9

CSIQ

Canadian Solar Inc.

-77.1

CSUN

China Sunergy Company Ltd.

-76.1

DSTI

DayStar Technologies Inc.

-85.0

EMKR

EMCORE Corporation

-91.5

ENER

Energy Conversion Devices Inc

-25.1

ESLR

Evergreen Solar, Inc.

-81.5

FSLR

First Solar, Inc.

-48.4

JASO

JA Solar Holdings Co., Ltd

-81.2

LDK

LDK Solar Company Ltd.

-72.1

RSOL

Real Goods Solar, Inc.

-63.5

SOL

ReneSola, Ltd. (United Kingdom) ADR

-77.5

SOLF

Solarfun Power Holdings Co.

-84.7

SOLR

GT Solar International Inc

-82.5

SPIR

Spire Corporation

-78.3

SPWRA

Sunpower Corporation

-71.6

STP

Suntech Power Holdings (China) ADR

-85.8

TSL

Trina Solar Limited

-82.7

WFR

MEMC Electronic Materials, Inc.

-83.9

YGE

Yingli Green Energy Holding Company Ltd

-84.2





2008 Average Solar Stock Decrease

-76.0%





Leading Indexes





DJIA

Dow Jones Industrials

-33.8

SPX

S & P 500 Index

-38.5

NASD

Nasdaq Composite

-40.5





Average Index 2008 Decrease

-37.60%

*Beta is a financial measure of correlation to the general market. A stock’s Beta that is equal to 1 means that a stock moves exactly with the market. A higher (than 1) Beta means that the stock moves greater in BOTH directions than the market. This also implies greater volatility.

A Brief History of Solar Stocks

If you look at Solar Stocks and the year they had in 2008 and put it into perspective, you will see that it is actually another stage (a painful stage) in the development of the new solar industry. New industries do not just spring into prominence instantly, their road to maturation are almost always a very bumpy, volatile and hazard-filled path. The solar industry will be no different. There will be great opportunities, but also great risk. Unfortunately, they go hand in hand.

If we look at the very short history of solar stocks through past headlines of stories I have written it would look like this:

2005 was “The Year of Solar Stocks,” where solar stocks outperformed the general averages by 20-fold, gaining an average of 134% versus the major indexes average gain of 6%.

2006 was “The Year of the Solar IPO,” a year in which the largest number of solar related companies, to date, came public though IPO’s.

2007 was “The Year of Thin-film Solar.” This was the year when the industry and the general public really seemed to focus on thin-film technologies and their longer term potential.

2008 was “The Year of the Solar Stock Collapse,” in which the general stock market had its worst year since 1931 and solar stocks were down 76% on average.

What is my Outlook for 2009? I will cover that in the next article, but first I would like to repeat some information that I think is worthwhile for investors. In columns in September and October of 2008 (see below) I wrote about when markets have historically turned around and how aggressive investors can use a simple technique to try to increase the timing accuracy of their trading:

When Markets Historically Have Turned

“However, now that we are in this horrible market the best thing to do is to prepare for the time when it turns around to the upside. Keep in mind, that this turn will always take place at the darkest hour and when the word “recession” is everywhere.”

“Remember, in the short term the dominating factors are primarily psychological. In the long term it is always reality.”

A Simple, But Effective Trading Technique

“How can an investor prepare when it comes? Well that is certainly something that can be very difficult to predict and most likely would require some measure of luck. But one of the simplest short term methods I have used over the years to determine trading points for stocks (and the market in general) is the 50-day moving average. To summarize:

  1. If a stock is trading above its 50-day moving average it is in an uptrend.

  2. If a stock is trading below its 50-day moving average it is in a downtrend.”

The Market Situation Today

If look at the general press today, you will see the word “recession” and maybe even the word “depression” everywhere — T.V., magazine covers and newspapers. Psychology is dominating the market and the primary element of this is fear. If you remember from prior articles there are two key elements in the stock market — fear (at bottoms) and greed (at tops).

Keep in mind that while the media is looking through the rear-view mirror, the stock market is looking through the front windshield. The market is looking out 6 months or more and that is what will be reflected in stock prices, not what is happening now.

Isn’t it strange that you very seldom ever heard that the market is UP over 20% in the last month or so?

Take a look at the table below. Eight of our stocks are above their 50-day moving average versus only one stock being above its 50-day moving average in September, October and November of 2008. This certainly tells you that the group as a whole is looking more “technically” healthy and starting to (hopefully) form some meaningful bases for future advances.

Solar Stocks Snapshot 2008 Year End

 

 

 

 

 

 

 

 

Symbol

Company Name

Recent Price

50 Day MA

200 Day MA

 

 




AKNS

Akeena Solar, Inc.

1.72

2.132

4.439

ASTI

Ascent Solar Technologies, Inc.

3.76

4.093

8.944

CSIQ

Canadian Solar Inc.

6.46

6.717

23.584

CSUN

China Sunergy Company Ltd.

3.95

3.517

7.563

DSTI

DayStar Technologies Inc.

0.94

1.287

2.843

EMKR

EMCORE Corporation

1.3

1.937

5.048

ENER

Energy Conversion Devices Inc

25.21

28.018

48.662

ESLR

Evergreen Solar, Inc.

3.19

2.984

7.186

FSLR

First Solar, Inc.

137.96

127.379

219.618

JASO

JA Solar Holdings Co., Ltd

4.37

3.622

13.91

LDK

LDK Solar Company Ltd.

13.12

14.873

30.505

SOLF

Solarfun Power Holdings Co.

5.01

5.244

12.556

SPIR

Spire Corporation

5.14

5.638

10.935

SPWRA

Sunpower Corporation

37

33.46

67.349

STP

Suntech Power Holdings (China) ADR

11.7

11.467

32.145

TSL

Trina Solar Limited

9.29

9.141

26.952

WFR

MEMC Electronic Materials, Inc.

14.28

15.627

44.682

YGE

Yingli Green Energy Holding Company Ltd.

6.1

4.768

13.86

Please keep in mind that there that there is no way to know the perfect time to buy stocks and that there is no perfect system for predicting stock movements. However, all that can be said is that stocks selling above their 50-day moving average tend to have a better chance of moving higher and may be the stronger stocks in the sector.

Also remember that the solar sector has a very high Beta and is extremely volatile and one must be a nimble trader and constantly stay alert in order to make money in this emerging market segment.

Mr. Lynch has worked, for 32 years as a Wall Street security analyst, an independent security analyst and private investor in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this field. He was the contributing editor for 17 years to the Photovoltaic Insider Report, the leading publication in PV that was directed at industrial subscribers, such as major energy companies, utilities and governments around the world. He is currently a private investor and has from time to time been a financial/technology consultant to a number of companies. He can be reached via e-mail at: [email protected]. Please visit his website for the promotion of solar energy — www.sunseries.net