The solar industry puzzle is missing a few pieces
Today's Financial News - Posted June 15, 2009
The solar industry is taking a hit as Washington moves on to fight battles on Wall Street and in the healthcare sector. Many solar investors are wondering what happened. Is there still time to cash in your profits?
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Hype helps and hype hurts. It is time to get ready for the pain.
After months of waiting for Obama’s “golden touch” to save Wall Street and the world, sentiment is turning against him and his plans.
The market is reacting sharply to the President’s moves today.
Investors woke to news of major Wall Street reforms coming later this week. As Washington tightens the screws on runaway prosperity, the average investor had better be prepared for less-than-stellar gains.
For my thoughts on the administration’s tweaking of the risk/reward system, see my earlier article.
But Obama likes to spread his attacks on multiple fronts. A divided enemy, he feels, is easier to defeat. By creating a buzz about reforming healthcare, he can slip by major financial regulations without making more than a few Section-B headlines.
As the nation turns its attention to another Washington-created crisis, the hype-filled stocks investors have been using to rack up profits are drying up quicker than a sun-backed worm. The tighter the contraction on the Street, the further the losers will drop.
Brace for impact
Sure, there are plenty of green-energy companies that will be successful over the next few years, but far too many of them are nothing more than financial experiments. They soared on post-election optimism. And now that reality is setting in, their investors are wondering what in the world they bought into. (A lot of voters are thinking the same thing).
The solar industry is showing its investors the optimal time to take profits and run has come and gone. Shares of some of the sector’s most popular companies are down by double-digit proportions today.
GT Solar (NASDAQ:SOLR) is down by nearly 13%. Evergreen Solar (NASDAQ:ESLR) is down by 10%. Real Goods Solar (NASDAQ:RSOL) is down by 9%. And even Asia’s players are getting hit, with China Sunergy (NASDAQ:CSUN) down by 8%.
From here, expect plenty of choppy action. Washington just launched a full-on healthcare offensive, which means Cap-and-Trade legislation, which is even more politically and economically charged will be pushed to a back burner.
If you want to stick with the sector, do your homework and do not make feel-good investments. Dissect balance sheets. Research product pipelines. And most importantly, ensure the company has more than enough liquidity to see it through what will likely be a tumultuous end of 2009 and 2010.
Solar energy represents great technology and will likely play some sort of role in our future energy prospects. But it is not the strongest investment. There are no clear winners. The industry is still in its infancy. And the hype is off the scale.
If you are sitting on big profits, now is the time to lock them in. Join the other sellers today and make a move to a more predictable, reliable sector.
Washington is moving on. So should you.
Next Article: La-Z-Boy not looking so lazy
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