iBankCoin
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Joined Apr 1, 2010
8,861 Blog Posts

Solar Bombs Blowing Up Everywhere

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Those “random” solar stocks have now gone essentially roundtrip to their March of 2009 lows. When you look at charts of solars like FSLR TSL¬†and LDK, it is little wonder why the solar ETF, TAN, is plunging as though chocolate wafers were more valuable than solar wafers.

Having said that, with solars coming within pennies of those major 2009 bear market lows, the presumption is that they will find support here. Moreover, the daily chart of FSLR, perhaps the solar with the best name recognition, has a notable bullish RSI divergence.

Solars have tortured buy and holders to no end. In fact, they have destroyed so much of their capital we never hear from the solar bulls anymore. Just as the case was with my GNK and RIMM calls last month, the solars might be so bad that they, too, are good here. Click here to see that post.

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11 comments

  1. Dave

    I took solars off my watch list, but recently gave them another look. Thanks for the confirmation

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  2. discoordinated

    I made money shorting FSLR today, but I can’t hold it over night anymore. I can only short these things during the day because I don’t want to be the guy who wakes up to find out GE is buying FSLR for twice yesterdays value while I am holding short.

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  3. Ivan

    Well, the solars may very well bounce here but I don’t see myself right here as a happy owner of solar stocks

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  4. FIG

    I have been saying this for months, and will say it again. The solar industry is DEAD. The Chinese destroyed the industry like they do to every other industry they enter. There are no margins anymore for solar panels.

    If you think these stocks are cheap now, just wait. Almost all of these solar companies will be out of business in a few years.

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    • chessnwine

      That is exactly what the stocks are saying now. Question is–has it been priced in for now?

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      • Po Pimp

        If the idea is the company is going to be out of business in a few years and the stock is above $0, then no it hasn’t been priced in.

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        • chessnwine

          Yeah but Po the key phrase there is “in a few years.” It is a big if anyway, to presume all solar companies will literally perish. Even if they do years from now, they can still bottom here for quite a while.

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          • najdorf

            The problem with this kind of call is that the continued existence of some sort of solar industry does not lead to the conclusion that current equityholders can expect adequate returns on capital. Many of the companies are over-leveraged, and much of the leverage is concealed in leases and forward purchase agreements rather than book debt. Expected solar sales don’t support the business models and balance sheets these companies have built, many other claimants are ahead of the equity, and therefore much of the equity is worthless. See Solyndra, Evergreen, etc.

            However, bankruptcies aren’t going to reduce competition for surviving companies, because none of the assets are going anywhere. As companies go bankrupt, state-backed buyers will purchase the assets and continue to operate them, pushing down returns for everyone in the industry. Overcapacity will take forever to resolve because Chinese, U.S. and European governments all LOVE this industry and will continue to push capital at it regardless of returns. If I held any solar stocks I would sell out to the perennial optimists who think green energy is the next can’t-miss thing even though it has destroyed huge amounts of wealth for decades.

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  5. SoSore

    I lost sooooo much on ENER and ESLR I can never go back to solar stocks…ever…did I say never again…

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