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Solar Stocks: Making World Peace, One Multicrystalline Wafer At A Time
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I love the sun. I chose the name "The Stock Surfer" because I like all things beach. So you might think solar stocks would be right up my alley. If by "alley" you mean "stocks I wouldn't touch with a 10 foot pole," you'd be correct. But as it stands, I enjoy the beach more than the alley, and I enjoy laying in the sun more than betting on it. Solar stocks have been hot (so many puns, so little time) at times over the past year, but I'm not sure which one to trust. First Solar (FSLR) has held up well on a technical basis, but a P/E of 112 is a yellow flag, if not a red one. A more exotic solar play, and by that I mean a Chinese one, is LDK Solar (LDK). LDK was taken out to that alley I was talking about and was beaten senseless. From December to March, LDK went from 70 to 20. Does that mean it is now a bargain? Or was it mere hype in the first place? I'm not sure. What I am sure of is this: A stock that swings from 70 to 20 and back again (yes, it did this twice) is wild by nature. Moves like that tell me the market isn't sure where to value this thing. Sure, 20 could be a steal. 20 could also be a pit stop to 10. The only certainty is a crazy ride. As for the "story" behind solar, I admit that the idea of using the sun to power my HDTV is quite appealing. But is it really going to happen? Whenever oil dominates the headlines, I hear a lot about how (insert alternative energy play here) is going to power my car and bring world peace. Yet, I don't know anyone who has a solar panel on their house or car, other than perhaps Al Gore. And although every beauty pageant candidate from Miss New Jersey to Miss Jiangxi Province (home of LDK Solar!) is clearly working on world peace, I haven't seen that come to pass either. Color me skeptical. As with any stock, I say go for it as long as you have an exit strategy. My exit strategy for now is to avoid the sector altogether. [This article posted simultaneously on my personal blog, with pictures.] | ||
