This is a Big Week for Solar
Matthew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
After being left for dead by most investors earlier this year, solar stocks have come back with a vengeance. Industry leader First Solar (NASDAQ: FSLR), for example, has rebounded 106% since hitting its all-time low of $11.43 on June 4, after trading at over $300 per share in 2008. The rest of the solar sector has experienced a similar rebound. However, this coming week can provide some serious insights on the current state and future of this young industry. With three large solar names set to report earnings on Monday and Tuesday, a plethora of telling information will be available for investors to digest. The companies reporting are:
1.) Yingli Green Energy (NYSE: YGE) – Based in China, this company designs, manufactures, and sells PV modules. They also use those modules to design, assemble, and install PV systems. Yingli investors have had an even tougher time than First Solar’s, with the company's stock price falling all the way from a high of $41.50 in 2007, and is currently trading just over its all-time low of $1.28, beaten down in part by the recently-imposed U.S. tariffs. The company has a market cap of just $217.6 million, a far cry from the $6.4 billion it was once worth. Earnings reports have disappointed for the past 4 straight quarters, so investors will be looking for any bright spots when the company reports on Monday.
2.) Trina Solar (NYSE: TSL) – Like Yingli, Trina has also plummeted lately as a result of U.S.-imposed tariffs. Trina Solar was trading over $30 as recently as April 2011, and has since taken a nosedive to $2.32, just over its 52-week low. Trina has disappointed the market the last 6 consecutive quarters, which would explain the extremely rapid plunge. When the company reports on Tuesday, it may provide some insight as to whether Chinese solar companies are even sustainable in the U.S. anymore.
3.) Also reporting are Jinkosolar and LDK Solar, which are smaller, but very relevant solar manufactures.
What could it mean??
These earnings reports in and of themselves may not seem significant for the majority of investors. In full disclosure, I am bullish on solar as a long-term investment and I follow these names very closely to monitor the sector. However, the success (or failure) of the solar industry has implications that reach far beyond these typically associated names. More and more, large widely-held companies are delving into the solar space. For example, 3M has been making solar films for 25 years, but in 2009 formed a renewable energy division in order to grow its solar and wind programs. DuPont is a leading materials supplier to the solar photovoltaic industry, and in 2010, General Electric announced that it would be focusing the majority of its R&D efforts on the thin-film solar PV market.
The list of household names delving into solar is growing rapidly. Any sustained strength (or further weakness) in the sector has the potential for a huge effect on the share price of these companies. This is especially true for a company like GE, which is devoting so much of its research capital to solar endeavors.
KWMatt82 has no positions in the stocks mentioned above. The Motley Fool owns shares of First Solar and General Electric Company. Motley Fool newsletter services recommend First Solar and 3M Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!