Struggling Solar Stocks at Risk of Being Delisted

The announcement this week that China-based Suntech Power Holdings (NYSE: STP), which bills itself as “the world’s largest producer of solar panels,” is at risk of being delisted by the New York Stock Exchange, cannot be good news for the solar industry. The announcement came about a month after Suntech founder Zhengrong Shi surprised analysts by stepping down as CEO. He remains Chairman and Chief Strategy Officer.

Suntech stock, which was trading for $2 the last time we checked in May, closed Sept. 25 at $0.92, down 9 cents for the

Photo courtesy of nrel.gov

day. Per NYSE rules, Suntech has six months following the NYSE warning (which came Sept. 10) to get its average stock price back up over $1 over a 30-day period.

China-based JA Solar (Nasdaq: JASO), which bills itself as “China’s largest solar-cell maker,” is also being threatened with a delisting. JASO announced Sept. 24 that it is seeking to strengthen its balance sheet by buying back $89.2 million of its debt. It last closed above $1 on Aug. 28. JASO closed Sept. 25 at $0.85, no change for the day.

This gloomy news prompted us to take a look at several other solar stocks we have followed in the past. They include:

 Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com/), which specializes in thin-film solar modules, has bounced back from its year-long slide. FSLR traded as high as $142 during the summer of 2011, but fell down to $13.66 when we last checked in May. FSLR closed Sept. 25 at $20.51, 49 cents on the day.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/ ), which sells a variety of solar products, has seen its stock price stabilize since December. Back in summer 2011 CSIQ traded for more than $12 but by last May it had dropped to $2.70 with a market cap of $117 million. CSIQ closed Sept. 25 at $3.01, up 2 cents on the day. It’s market cap is now $130 million.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com/) makes a wide variety of solar products and systems. SPWR stock in mid-May was trading for about $5. SPWR closed Sept. 25 at $4.60, down 14 cents on the day. Its market cap is now $547 million.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/) manufactures solar products and silicon materials. LDK, which was trading for nearly $5 in late December 2011, dropped down to $2.85 in mid-May with a market cap of $373 million. It closed Sept. 25 at $1.25, down 4 cents on the day. Its market cap is now $167 million.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. It has a chart similar to many of the other solar stocks, which reached highs in the summer of 2011. Since we have been watching it carefully, we have seen in close in August 2011 at $15.88, in December 2011 it had dropped to $7.39 and by mid-May 18 it was down to $5.70 with a market cap of $464 million. It closed Sept. 25 at $4.47, up 7 cents for the day. Its market cap is now $316 million.

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com/) makes photovoltaic products including cells, modules and systems. YGE closed in mid-May 18 at $2.52. It closed Sept. 25 at $1.74, up 5 cents for the day. Its market cap is now $272 million.

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Solar Stocks May Be Struggling but Industry Is Creating Jobs

The solar industry in the U.S. may be struggling in a market laden with cheaper Chinese imports but you can’t say it isn’t creating jobs. In a report out this week, the The Solar Foundation, a non-profit, “non-lobbying organization” dedicated to increasing the adoption of solar energy (http://www.thesolarfoundation.org/), released its second annual review of the nation’s solar workforce, noting that hiring in the solar industry is increasing and and the industry now employs “more than 100,000 Americans.”  And employment in the industry is expected to grow by 24 percent in the next year, creating 24,000 jobs, according to the report, titled “National Solar Jobs Census 2011: A Review of the U.S. Solar Workforce.” 

 
The report also noted that the solar industry is increasing jobs nearly 10 times faster than the rest of the economy as a whole. The solar industry’s job growth rate as of August was 6.8 percent compared to the estimated overall economy rate of 0.7 percent. The report included more than 17,198 solar sites and 100,237 solar jobs in August nationwide.
 
The Los Angeles Times led its Business section Oct. 17 with the report because one in every four solar jobs is held by a Californian (http://www.latimes.com/business/la-fi-solar-jobs-20111017,0,3230671.story). Of the 100,237 solar jobs nationwide, an estimated 25,575 were in California. The next state in the rankings was Colorado, well back of California  with 6,186 solar jobs, followed by Arizona with 4,786. Then came Pennsylvania (4,703), New York (4,279), Florida (4,224), Texas (3,346), Oregon (3,346), New Jersey (2,871) and Massachusetts (2,395).
 
The other big solar-related news of the week was a trade complaint filed by a group of seven American solar panel makers accusing China of “receiving unfair government subsidies and dumping its products in the United States at below cost,” according to a report in the New York Times (http://www.nytimes.com/2011/10/21/business/chinese-solar-trade-case-has-clear-targets-not-obvious-goals.html?_r=1).
 
None of this seemed to stop the slide in stock prices of solar panel manufacturers which has been going on for months. Among the larger caps, Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com/), the world’s largest maker of thin-film solar modules, rallied on Oct. 20, up $1.46 to $53.77. But this is a stock that has been as high as $175 this year and was more than $100 as recently as Aug. 31.
 
Some of the smaller caps included:
 
China-based Suntech Power Holdings (NYSE: STP, http://www.suntech-power.com/), a smallcap with a $373 million market cap which makes photovoltaic products and provides construction services, closed on Oct. 20 at $2.07. This stock was trading for $5.25 on Aug. 31 and $2.64 on Sept. 23.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/), which sells a variety of solar products, closed Oct. 20 at $3.04, down 16 cents for the day. CSIQ was trading for $6.74 on Aug. 31 and $4.72 Sept. 23.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/), which manufactures solar products and silicon materials, closed Oct. 20 at $3, down 13 cents for the day. This stock was trading at $5.71 on Aug. 31 and $3.40 Sept. 23.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/), which designs, manufactures and sells photovoltaic modules worldwide, closed Oct. 20 at $7.15, down 17 cents for the day. It closed at $15.88 on Aug. 31.

Shanghai-based JA Solar Holdings Co. (Nasdaq: JASO, http://www.jasolar.com), which makes solar cells and other solar products, closed Oct. 20 at $2.14. It closed Aug. 31 at $3.66.

 

Solar Bear Tells Barron’s Outlook Is Cloudy

If you believe solar analyst Aaron Chew, the solar industry is in for a pretty major slowdown. At least that’s what he told Barron’s last week during a Q&A that ran under the headline: ‘Solar Outlook: Cloudy.’

Chew, who launched his solar coverage for Hapoalim Securities last July, lists oversupply and a retrenching of government programs as the culprits in the decline of the solar market and says Europe has been “the big driver of solar” for many years. He expects Germany’s solar installations to hit 6 gigawatts this year–more than Japan, the U.S., Italy and France have installed combined in all their histories. But during the next four months governement incentives will decline by double-digit percentages, taking the installation rates down with it.

On the supply side, along with declining installations comes the entrance of three large new players in the global solar market: Samsung, LG and Hyundai, which will ultimately push down solar prices, according to Chew. That may be good for homeowners and commercial installations but perhaps not so good for the profit margins of smallcap solar companies. A good place to check on the progress of the U.S. solar business is the Solar Power International conference set for Los Angeles Oct. 12-14 (http://www.solarpowerinternational.com/sepa2010/public/enter.aspx). It’s considered the nation’s biggest and best conference each year.

We’ve been following the progress of several small cap solar firms for the past few years and, as is the case in most industries, some seem to be thriving while others struggle, based on the issues inside of each company.

Marlboro, MA-based Evergreen Solar (Nasdaq: ESLR, http://www.evergreensolar.com) is one of those continuing to struggle and their issues have been well documented (http://seekingalpha.com/article/226927-ceo-departs-troubled-evergreen-solar?source=yahoo), including the recent departure of their CEO. Evergreen’s stock, while trading relatively heavily (1.5 million shares a day on average) still languishes around 62 cents a share, not far from the 65 cents a share it was selling for when we last checked in early August.

China-based Renesola Ltd. (NYSE: SOL, http://www.renesola.com) also trades actively (nearly 2 million shares a day) and this week was selling for nearly $11.50 a share, just below its 52-week high of $12.10 (and way off 52-week low of $3.50), and nicely above our last check in early August. Back then SOL was selling in for about $7.35 range so perhaps, if you believe Chew, now might be the time to take some profits off the table.

Shanghai-based JA Solar (Nasdaq: JASO, http://www.jasolar.com) has also been enjoying a good run. Back in early August the company’s market cap was $897 million and the stock price was in the mid-$5 range. This week the stock is in the mid0$8 range and its market cap has ballooned to $1.37 billion.

China-based Solarfun Power Holdings (Nasdaq: SOLF, http://www.solarfun.cn/einfo.htm) is another solar company we are just beginning to watch. The company manufactures and sells photovoltaic cells and modules as well as silicon ingots and wafers, among other products. It’s relatively small (market cap $723 million) and currently trades at a bout $12.50 a share, right at the top of its 52-week range.

Solar Stock Growth Trajectory Slows Despite Upbeat Outlook

When we last took a look at smallcap solar power stocks in early 2009, they were in the dumps, the victims of a slumping global economy. Today, many of them have rebounded strongly in the second quarter in tune with the economy, at least for the moment. No doubt President Obama’s stimulus package, which included a 30 percent tax credit for utilities, helped bring the industry some life.

But some fear trouble ahead. Indeed, TheStreet.com posted an article Aug. 11 about the potential of a “Solar Pricing Squeeze ” (http://www.thestreet.com/_yahoo/story/10832669/1/is-the-solar-pricing-squeeze-just-ahead.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA) after investors sold off shares of Shanghai-based JA Solar (Nasdaq: JASO, http://www.jasolar.com) on Aug. 10 despite the fact that management was upbeat about the remainder of 2011 and raised its shipment guidance. The share price, which has been as high as $6.95 this year, dropped into the mid-$5 range this week.

Eric Rosenbaum, the author of TheStreet.com story, noted that for whatever reason, “solar stocks attract the most short-term minded of investors” who can trade in and out of the various solar companies and reap quick gains.

JA Solar is a true smallcap (about $897 million market cap) but the scare seemed to hit the bigs as well. Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com), with a market cap of $10.7 billion, also was getting slammed mid-week, down $4.52 (3.5 percent) early Aug. 11 in the midst of a very down day overall throughout the market.

Merrimack, NH-based GT Solar International (Nasdaq: SOLR, http://www.gtsolar.com), which manufactures the equipment for making solar modules, was down mid-week also to about $7.85. But this stock traded at $4.45 when we last checked in the spring of 2009. It has been as high as $8.23 in the past 52 weeks.

China-based ReneSola Ltd (NYSE: SOL, http://www.renesola.com), with a market cap of $636 million, plunged more than 8 percent Aug. 11 to $737. Still, that is a much better price than the $2.56 per share when we last checked.

Marlboro, MA-based Evergreen Solar (Nasdaq: ESLR, http://www.evergreensolar.com), a pure solar play, continues to limp along at $0.65. The stock received a nice lift on Aug. 3 based on its second quarter results showing revenues of $84.5 million, up 7.7 percent over the first quarter. But issues with its Chinese manufacturing unit and foreign monetary exchange losses apparently continue to plague its bottom line.