Solar projections are too bright

Analysts and investors have their expectations set to high for this industry.

By Jim Van Meerten Jan 20, 2011 3:57PM

Image: Jim Van MeertenAm I the only one who is having butterflies about the solar industry? Is there a market for this resource, or is it all just smoke and mirrors?


Using Barchart, I found 4 solar stocks that on average are up over 20% in the last month alone. The brokerages have fantastic projections and there is very high investor sentiment, but my intuition is holding me back from making a recommendation.  Here's what others think. Let me hear your opinions.

 

Jinko Solar (JKS)

  • Barchart Trend Spotter technical buy signal
  • 9 new highs and up 29.13% in the last month
  • Relative Strength Index 64.33% and rising
  • Trades around 28.16 with a 50 day moving average of 24.63
  • Wall Street brokerages have 4 buy, 1 hold and 2 under perform recommendations
  • Revenue projected to increase 177.40% this year and 43.10% next year
  • EPS estimated to increase 1,302.30 this year and increase annually 15.00% for at least 5 years
  • Motley Fool CAPS members vote 75 to 22 and All Stars vote 14 to 8 that the stock will beat the market
  • Barchart Trend Spotter (tm) technical buy signal8 new highs and up 23.40% in the last month
  • Relative Strength Index 55.18%
  • Trades around 10.23 with a 50 day moving average of 9.42
  • Wall Street brokerages have 8 buy and 2 hold recommendations published
  • Revenue projected to increase 131.50% this year, 16.80% next year
  • EPS estimated to increase 324.40% this year, 11.90% next year and 11.67% annually for at least 5 years
  • Motley Fool CAPS members vote 1,103 to 29 and the All Stars vote 297 to 4 that the stock will beat the market
  • 88% Barchart technical buy signal
  • 5 new highs and up 21.09% in the last month
  • Relative Strength Index 62.40% and rising
  • Trades around 12.72 with a 50 dy moving average of 11.11
  • Wall Street brokerages have published 10 buy, 6 hold and 5 under perform recommendations
  • Revenue projected to increase 111.60% this year and 27.60% next year
  • EPS estimated to increase by 188.10% this year, 19.90% next year and 23.35% annually for the next 5 years
  • Investor sentiment on Motley Fool is high with the CAPS members voting 1,372 to 94 and the All Stars 320 to 33 that the stock will bet the market

Trina Solar (TSL)

  •  80% Barchart short term technical buy signal13 new highs and up 18.66% in the last month
  • Relative Strength Index 65.16% and rising
  • Trades around 27.37 with a 50 day average of 24.35
  • Wall Street brokerages have published 25 buy, 3 hold and 2 under perform recommendations
  • Revenue projected to increase by 104.10% this year and 18.10% next year
  • EPS estimated to increase 100.00% this year, 8.00% next year and 18.98% annually for the next 5 years
  • Investor sentiment on Motley Fool high with the CAPS members voting 1,034 to 186 and the All Stars 267 to 64 that the stock will beat the market.
As I write this post this song keeps ringing in my head:

Everybody's wrong everybody's right 
Someone must be wrong when someone else is right 
Everybody's wrong everybody's right 
You tell me that I'm wrong 
Then you tell me that I'm right 

Are too many people expecting too much from the solar industry? Is the industry already over valued? Should I get on board or hop off? Is everybody wrong or is everybody right?

Jim Van Meerten is a professional investor with over 40 year experience in investing in stocks, mutual funds and ETFs.  He shares his knowledge on Barchart in his daily blogs -- Barchart Portfolio Blogs.


1Comment
Jan 20, 2011 4:35PM
avatar
One thing to remember isn't driven by stock pricing or vending at all and that involves a matter of pure astronomy.  For roughly twelve hours each night the sun goes down and no solar panel known to man makes one amp of energy, renewable or otherwise, without sun light shining upon it.   Thus, no solar panel that can possibly be constructed will EVER be more than fifty percent efficient.  Given the losses involved in the conversion of light to electricity, no cell is ever really able to generate more than 25% power and this is directly dependent upon light striking the cell structure at an optimum angle, which today is roughly a 90 degree shot.  That means to track the sunlight, the cell array must move controlled by some manner of an electric motor ordered about by some manner of computer.  As this technology, controlling the movement via a computer or electromechanical device has been on the market for literally decades, I shall not say it can not be done.  It does however add measurably to the costs of maintaining the system as well as installation.  The question becomes, when do folks tell the powers to be enough it is simply too expensive.
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