big ideas for global investors Search
   Members       Sign-up       Newsfeeds        Companies        Stock Directories       Research       Video       Funding   

AddThis Social Bookmark Button
+Related topics

The Market and Solar Stocks

By Peter Lynch
Exclusively for
November 24, 2008

First of all, the market has simply put, been terrible. This is certainly shaping up to be a year for the record books. In fact, as of the close Friday (8-21-08) the Dow Jones is having the SECOND WORST year in its history, with 1931 being the worst year with a yearly loss of -52.67%. The numbers below reflect the performance of the three main market indexes since June 1 2008.


Dow Jones Industrials



Standard and Poor’s 500








As to my opinion of this general market situation, I think it is either the beginning of very bad times or a generational buying opportunity in the market.

There is really no way to tell for sure, but based upon my experience in the market over the past 30 years and the opinions of numerous others that I respect, I believe we are very close to a great buying opportunity.  It is impossible to ever “catch” the exact bottom, but I do feel that most of potential future bad times have already been incorporated into current stock prices by the market. Therefore, barring a financial Armageddon, I think that prices will be significantly higher in 6 months than they are now.

Regarding my opinion on solar stocks, the numbers below reflect the performance of solar stocks since June 1 2008. Obviously there has been a near total collapse of the average stock which was brought on by a combination of: sky high P/E multiples, an insanely volatile general stock market and dire predictions of future industry progress.



Performance %


Akeena Solar, Inc.



Ascent Solar Technologies, Inc.



Canadian Solar Inc.



China Sunergy Company Ltd.



DayStar Technologies Inc.



EMCORE Corporation



Energy Conversion Devices Inc



Evergreen Solar, Inc.



First Solar, Inc.



JA Solar Holdings Co., Ltd



LDK Solar Company Ltd.



Real Goods Solar, Inc.



ReneSola, Ltd. (United Kingdom) ADR



Solarfun Power Holdings Co.



GT Solar International Inc



Spire Corporation



Sunpower Corporation



Suntech Power Holdings (China) ADR



Trina Solar Limited



MEMC Electronic Materials, Inc.



Yingli Green Energy Holding Company Limited (China) ADR





   Average Loss = -79.31%

I agree that solar P/E’s and expectations were FAR too optimistic and missed a number of rather obvious problems that were rapidly approaching (i.e. coming silicon over supply), however, at this time I believe that current expectations have moved equally to the opposite extreme with FAR  too much pessimism.

A great degree (a vast majority in my opinion) of this current activity in the market and in solar stocks is principally driven by FEAR.  People are afraid NOT to sell because stocks are going to ZERO and people are afraid to buy because stocks are going to ZERO. Obviously BOTH cannot be correct. But the point is that the market is currently in the phase of market dynamics that is totally dominated by emotions. These emotions are rampant and further fueled by the silly people in the media jumping on every tidbit of information and trying to draw a conclusion from each of them (which is impossible), thereby helping, in a way, to compound and extend the panic underlying this this crisis.

With this said is there a way to look at solar stocks today and try to “pick” the ones that have the most potential?  Once again, it is impossible to accurately determine which will be the winners and which will be the losers. However I think that there are at least three of areas an investor should look at that I would consider to be critically important. If a company possesses ALL three of these characteristics it would have much higher probability that it will be a leader in the next phase of the emerging solar boom.

First:  CASH.  During times like this CASH IS KING. So an investor will have to make sure to check each potential company’s balance sheet and insure that they have adequate cash reserves to carry them through at least 2009 without need of further financing.

Second:  RELATIVE STRENGTH.  In periods like this good stocks and bad stocks BOTH are carried down with the general market. However, the better stocks generally drop last and come back (when the tide changes positive) first. These stocks will also most likely be the ones with the most cash (best financial shape) therefore with the best future prospects.  As a result, an investor should look for the solar stocks with the highest relative strength compared to the general market - they will be the early leaders in the next market stage.

Third: PRODUCT DIFFERENTIATION. With a new industry like solar the longer term leaders are generally the companies with some form of competitive advantage or product differentiation.  Remember these companies may have innovative products, but they must also pass the first two hurdles (cash and relative strength) in order to warrant further consideration as an investment. Five examples of this (not necessarily “official” recommendations) are listed below with their respective “differentiator” to give you a better idea of what I am referring to:

  • First Solar (FSLR) – low cost market leader in the thin film sector
  • SunPower (SPWRA) - highest efficiency product, therefore potential leader in the space constrained residential market segment.
  • Energy Conversion Devices (ENER) – unique product, with high margins in the flexible PV market segment.
  • SunTech (STP) – low cost producer in the crystalline PV market segment.
  • Emcore (EMKR) – one of only two producers of very high efficiency PV cells for the Concentrating PV (CPV) market segment.

Remember that even though this MAY BE a generational buying opportunity in the general market and the solar sector you should always consider this as higher risk money and money that you can afford to potential lose and also be money that you can be patient with and allow the situation to work itself out over time.

Mr. Lynch has worked, for 31 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: or at his new website:

About Our Green Investor Portals: is one of several green investor portals within and provides investors with stock news, exclusive articles and financial columnists, audio interviews, investor conferences and a directory of stocks within the renewable energy sector.

Renewable Energy and GreenTech Business and Stock News at

Peter Lynch RSS Feed:, Renewable Energy and GreenTech Business and Stock News RSS Feed:


"One of the first online investor resources providing in-depth information on renewable energy, greentech and water sectors." is a leading global investor and industry research resource portal specialized in sector investing covering over thirty industry sectors and global markets including China, India, Middle East and Australia.

Peter Lynch RSS Feed:, Renewable Energy and GreenTech Business and Stock News RSS Feed:

J. Peter Lynch has worked, for 31 years as a Wall Street analyst, an independent equity analyst and private investor, and a merchant banker to 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

Disclaimer: The views and opinions expressed in the research published are those of the individual companies and writers and not necessarily those of®, or any of the industry sector portals . At the time of publication, writers may hold positions in the stocks or companies mentioned.


Investor Ideas © 2000 - 2015®, ECON


login | logout | about us | contact | disclaimer / disclosure |
partners / links | job search | privacy policy |
advertise | trade | sitemap |