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Solar Renewable Stock Sector “Ice Cold”

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By Peter Lynch
June 19, 2006

With the Green Energy Virtual Stock Challenge starting on Monday the 19th of June, I thought it would be an ideal time to take a look at the renewable solar stock sector (see Note at end) and see how it is doing as of the close today - 16 June 2006.

As I have mentioned previous articles, 2005 was certainly the “Year of the Solar Stocks” and hopefully the beginning of the Renewable Energy age.

As you can see from the table below 2005 was an incredible year for “solar stocks”. The stocks with zero dollar change, PBW, STP and SPWR were not public in 2005.

Solar Stocks VS Popular Average for 2005

 

 

01/01/2005 to
12/31/2005

 

Curr Value

$ Change

% Change

DSTI

9.05

$6.50

228.07%

DESC

4.87

$5.08

203.20%

DSTI

9.05

$6.50

228.07%

EMKR

8.97

$3.93

112.61%

ENER

35.75

$21.43

110.92%

ESLR

11.99

$6.28

143.71%

PBW

18.82

$0

0%

SPIR

7.65

$3.06

69.70%

SPWR

27.74

$0

0%

STP

23.80

$0

0%

WFR

35.04

$8.92

67.32%

S&P 500 Equal Weight

1684.94

$100.47

6.45%

S&P 500

1251.54

$36.37

3.00%

Dow Jones

11014.55

$-65.51

-0.61%

NASDAQ

2129.95

$29.88

1.37%

However, as we all know, the market moves in cycles both up and down and usually going to extremes in both cases.

For those of you who have not been watching, the renewable energy sector of the market has had poor 2006 to date, especially when compared to 2005, and a terrible past SIX weeks. It has been in a severe correction phase, not just in the U.S. market but in the German solar market as well. The market as a whole has not been doing too well either, but compared to the “ice cold” renewable sector of 2006, it is doing fine.

 

 

05/01/2006 to
06/16/2006

YTD 2006

 

Curr Value

$ Change

% Change

$ Change

% Change

 

 

 

 

 

 

DESC

4.87

$-1.62

-24.96%

$-2.71

-35.75%

DSTI

9.05

$-3.58

-28.34%

$-0.2996

-3.2043%

EMKR

8.97

$-1.80

-16.71%

$1.55

20.89%

ENER

35.75

$-13.80

-27.85%

$-5.00

-12.27%

ESLR

11.99

$-1.97

-14.11%

$1.34

12.58%

PBW

18.82

$-3.83

-16.91%

$2.63

16.24%

SPIR

7.65

$-1.84

-19.39%

$0.2000

2.6846%

SPWR

27.74

$-11.36

-29.05%

$-6.25

-18.39%

STP

23.80

$-11.26

-32.12%

$-3.45

-12.66%

WFR

35.04

$-8.36

-19.26%

$12.87

58.05%

S&P 500 Equal Weight

1684.94

$-86.47

-4.88%

$25.85

1.56%

S&P 500

1251.54

$-53.65

-4.11%

$3.25

0.26%

Dow Jones

11014.55

$-328.74

-2.90%

$297.05

2.77%

NASDAQ

2129.95

$-174.84

-7.59%

$-75.37

-3.42%

Looking at the same stocks from a technical point of view, you can see that they are ALL below their 50 day moving average and most are below their 200 day averages. So there is obviously wide spread damage being done to the sector, most of which occurred in the last 6 weeks.

Symbol

Name

Recent Price

Trend

Mom

Mom Wks

50 Day MA

200 Day MA

Mkt Cap

DESC

Distributed Energy Systems Corp.

5.10

+

Neg

5

5.888

7.669

197

DSTI

DayStar Technologies Inc.

9.38

-

Neg

7

11.462

11.865

62

EMKR

EMCORE Corporation

9.45

+

Neg

6

10.137

7.853

476

ENER

Energy Conversion Devices Inc

37.46

-

Neg

5

45.825

41.386

1463

ESLR

Evergreen Solar, Inc.

12.39

-

Pos

1

13.049

12.033

828

PBW

PowerShares Wilderhill Clean Energy

19.10

-

Neg

6

21.451

18.722

682

SPIR

Spire Corporation

7.67

-

Neg

4

8.510

8.766

63

SPWR

Sunpower Corporation

27.73

-

Neg

5

34.290

34.385

258

STP

Suntech Power Holdings ADR

24.97

-

Neg

8

31.678

33.085

3683

WFR

MEMC Electronic Materials, Inc.

35.11

+

Neg

5

38.998

28.769

7352

The same magnitude of correction can be seen in the German PV market. All of the stocks are below their 50 day moving averages and most are also below their 200 day moving averages.

German PV Companies VS German Dow SX5P

 

 

05/01/2006 to
06/16/2006

YTD 2006

 

Curr Value

$ Change

% Change

$ Change

% Change

Sx5P

3269.05

$-267.15

-7.55%

$-80.05

-2.39%

 

ES6-FF

44.65

$-17.85

-28.56%

$1.71

3.98%

QCE-FF

55.00

$-18.05

-24.71%

$5.67

11.49%

SFX-FF

10.47

$-1.15

-9.90%

$0.4400

4.3868%

SOO1-FF

34.55

$-7.57

-17.97%

$9.00

35.23%

SWV-FF

49.00

$-14.00

-22.22%

$19.00

63.33%

SWW-FF

9.77

$-8.13

-45.42%

$-1.51

-13.39%

 

Symbol

Name

Recent Price

Trend

Mom

Mom Wks

50 Day MA

200 Day MA

ES6-FF

Ersol Solar Energy AG

44.65

-

Neg

5

56.098

51.357

QCE-FF

Q-Cells AG

55.00

-

Neg

16

68.128

64.929

SFX-FF

Solar-Fabrik AG

10.47

-

Neg

1

11.181

11.779

SOO1-FF

Solon AG Fuer Solartechnik

34.55

+

Neg

16

40.007

33.764

SWV-FF

Solarworld AG

49.00

+

Neg

5

56.617

42.119

SWW-FF

Sunways AG

9.77

-

Neg

6

15.273

14.905

These numbers, in both markets, certainly reflex the widespread damage in the hottest stock sector of the stock market in 2005. But once again the market works its unfathomable “wisdom” and all the great stocks in 2005 are totally unpopular in 2006. What has transpired in the few short months since the end of 2005?

Probably nothing, at least in the long term has fundamentally changed, but what about the short term? Are we at another extreme, where the market has taken things too far?

My guess it that we are far closer to a bottom in the correction than people realize.

Everyone is afraid, the “blood is running in the street”, and there are no buyers for the stocks. It could not “look” more negative.

But what else is there to consider? How about the likelihood that there are ALSO no more sellers? Isn’t there an old saying: “it is always darkest before the dawn”?

Don’t all the “legendary” investors say that they buy when everyone else is selling?

This is certainly interesting to consider and maybe, just maybe, it is an excellent time to be buying “GREEN” stocks, when there is panic in the streets and everyone else is selling.

Note: most of the public companies in the renewable sector are involved in Photovoltaics. There are obviously a number of other companies in other areas and a number of smaller companies. However, due to availability of data and an effort to focus, I have decided to focus on the largest area.

J. Peter Lynch has worked, for 29 years as a Wall Street analyst, an independent equity analyst and private investor, and a merchant banker in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977and is regarded as an expert in this area. He is currently a financial and technology consultant to a number of companies He can be reached via e-mail at Solarjpl@aol.com.

Disclaimer
Peter Lynch is an independent columnist for this web site and may hold long or short positions in any of the stocks mentioned in this article and those positions can change at any moment. InvestorIdeas.com Disclaimer: www.InvestorIdeas.com/About/Disclaimer.asp, InvestorIdeas is not directly affiliated or compensated by the companies mentioned in this article. Nothing in the articles should be construed as an offer or solicitation or recommendation to buy or sell any specific products or securities. Past performance does not guarantee future results.

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