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Monday, April 19, 2010

Solar Stocks Commentary from J. Peter Lynch

Solar Stocks Commentary from J. Peter Lynch


Point Roberts, South Salem, New York- April 19, 2010 – www.Investorideas.com and its green investor portal, http://www.renewableenergystocks.com/, update investors with solar stocks commentary from contributor, J. Peter Lynch.

Solar Stocks Commentary with J Peter Lynch – read other articles, Exclusively for InvestorIdeas.com and Renewableenergystocks.com

http://www.renewableenergystocks.com/PL/

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Current Status of Solar Stocks

Solar stocks did great for the first 12 months of the current bull market (3/09 – 3/10) – up an average of 124%. But as I mentioned in an earlier article the vast majority of that gain was centered in a 8 CHINESE stocks - CSIG,CSUN,JASO,LDK,SOLF,STP,TSL and YGE which were up an amazing 267.96% on average, certainly the major reason that the group as a whole was up 124%. Without the Chinese companies the solar group would have actually underperformed the major averages for that 12 month period.

Looking a bit deeper, OVER 50% of the 267.96% gain was from 2 stocks – CSIG and TSL. This is an extreme case of narrowing (2 of 21) leadership in a sector and is usually a bad sign for the sector. Also note that all of these “leaders” were Chinese companies, which indicates to me that the trend is clearly to LOWEST COST. Good for the Chinese companies, maybe not so good for U.S. and European based companies.

Looking at the first quarter of 2010 the numbers reflect this narrowing with solar sector underperforming the general market significantly.

Solar Stock Performance First Quarter 2010



All Solar Stocks Average -9.89%



Dow Jones +4.11%

S&P 500 +4.87%

NASDAQ +5.68%



So what does all this mean for the investor interested in the solar market sector?

1. It means that the industry is starting another transition phase in its long term growth. This is a period of “lowest cost wins” and of industry wide profit margin compression.



2. It means that because of these factors and probably a host of other factors (lower natural gas prices, uncertainly of government policy etc.) that the solar segment has been a lagging market sector and probably not one which is optimal at this time for new investment. Especially given the higher risk level that the general market is at now.



3. It also means, in my opinion, that the U.S. has to wake up and start to move forward NOW (instead of our “usual” approach of - thinking about having a meeting to discuss planning to do something maybe sometime in the future etc. etc. - i.e. all talk and very little action of any significance) with a strategy to compete with our lower cost Chinese friends. I do not think we can beat them at their own game – lowest cost via cheap labor etc. What we have to do NOW is to do what we do best – INNOVATE. This is the time for investment and focus on new technologies, “out of the box” technologies and not the same old thing. This is a time to increase focus, investment and activity NOT slow down and wait around for someone else to do something that we have historically always been the best at doing. The ball is in our court.



Mr. Lynch has worked, for 33 years as an independent analyst and 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 the past 17 years to the Photovoltaic Insider Report, the leading publication in Photovoltaics industry that was directed at industrial subscribers, such as major energy companies, utilities and governments around the world. He can be reached via e-mail at: solarjpl@aol.com or at his new website: www.sunseries.net.



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