Whoa! What Just Happened to My Stock?

Resist the urge to high-five everyone in the cubicles next to you. Your stock may have just strapped on a rocket pack and taken off for the moon, but smart investors won't celebrate until they know that upward leap was justified. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.

Is now the time to lock in profits, or is this just the first step toward even higher valuations down the road? Let's examine several stocks that just hit the afterburners, and see whether they're truly headed into orbit.

Stock

CAPS Rating
(out of 5)

Yesterday's Change

SunPower (Nasdaq: SPWRA  )

***

10.83%

Broadwind Energy (Nasdaq: BWEN  )

**

10.40%

Canadian Solar (NYSE: CSIQ  )

***

10.33%

Considering the markets were down 344 points at one point yesterday, the fact that they made up more than half that loss and closed off just 134 points, or 1.2%, is actually a big rally. Even the Nikkei has closed higher now, up 5.7%. Thus making stocks that went significantly higher bigger deals still.

New frontiers in investing
Does the situation in Japan signal the end of the nuclear power industry as we know it? Probably not, but it's definitely giving critics a lot of room to make their case. Germany shut down seven nuclear power plants to test them for safety, and has put back on track its plan to go nuclear-free by 2021. And the alternative energy sector is getting a major boost.

All across the solar sector, for instance, not only are SunPower and Canadian Solar soaring, but LDK Solar (NYSE: LDK  ) , Trina Solar (NYSE: TSL  ) , and the 38 companies comprising the CAPS Solar sector were all higher yesterday.

They've been fighting the perception they're industry is doomed for the time being because of the cuts to tariffs around the globe that have been enacted supporting installation of solar systems. Just the other day Canadian Solar plummeted as its Italian customers postponed their purchase decisions in the wake of the massive restructuring the government is proposing for the industry. France, too, has upended plans and Energy Conversion Devices (Nasdaq: ENER  ) has chosen to slash production of its thin-film products in response.

With fear of nuclear meltdowns rampant, expect political friends of solar energy to push for taxpayers to support the industry again. With over 90% of CAPS members expecting SunPower to beat analysts expectations and more than 96% of them feeling equally bullish about Canadian Solar being able to overcome the forces that only last week were arrayed against it, you can bet the solar industry will get hot once again.

See which way the wind blows
Those are the same factors that have suddenly caused the winds of change to shift in favor of the wind power industry. Wind tower maker Broadwind Energy was starting to show better results as it was, with sales rising nearly 50% last quarter and its backlog of business rising 8% to $226 million. It still recorded a loss of $37 million for continuing operations, largely comprised of a $36 million writedown of assets.

The tower segment of its business was helped along by a deal last year with Gamesa to provide towers to the turbine maker. And it just inked another deal Goldwind to supply 70 towers for installation by the second half of 2011.

Although by the looks of the performance of industry peers American Superconductor (Nasdaq: AMSC  ) and Superconductor Technologies, the wind business is beginning to blow up. Indeed, American Superconductor's shares were hit after it announced an acquisition, but the company it's buying should be immediately accretive to revenues and the business line ties in well to its wind power efforts. The new permanent magnet generators are used to help drive wind turbines.

CAPS member rastapatch is looking for Broadwind to benefit as fears over nuclear power's safety grow, while ddotoel sees the signs of a growing business as a good portent for the future.

Whether or not the industry has the wind at its back now, you can see which way the wind is blowing with Broadwind Energy by adding it to the Fool's free portfolio tracker.

Going into orbit
That's why it pays to start your own research on these stocks on Motley Fool CAPS, where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether your stock's headed for reentry, or off to infinity and beyond.

The Fool owns shares of SunPower. 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.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 16, 2011, at 2:00 PM, ecdfam wrote:

    << Energy Conversion Devices (Nasdaq: ENER) has chosen to slash production of its thin-film products >>

    Really Fool, "slash"??? Is the difference from forecasted production in this Qrt of 27MW to newly announced production of 25MW a SLASH?

    Fool, why always the negative articles on ENER and never any of the positives?

    Try focusing on: Europe legislation is focused on ground-mounted solar arrays with expected no negative impact on ECD's specialty niche - rooftop systems, ECD's rollout this summer of the revolutionary residential PowerShingle, ECD's $3.30/share worth of Cash in the bank, Ispat/JSW Steels announcement of a pending joint venture with ECD's Uni-solar division,...

    The glass is also half-full.

  • Report this Comment On March 16, 2011, at 5:31 PM, TMFCop wrote:

    ecdfam,

    If you just take February's low end forecast of 27 MW, it's not "slashing," but the high end was 33 MW which would amount to a 25% reduction which I would indeed characterize as "slashing."

    Moreover, it has said the changes underway will impact 50% of its revenues so it is also dramatically scaling back its cost structure.

    All in all, I think that warrants use of the verb "slashing."

    Rich

  • Report this Comment On March 17, 2011, at 1:33 PM, ecdfam wrote:

    Fool Rich,

    Please check your batteries in your calculator. 27 from 33 is only an 18% reduction; but, hey, its your story, use whatever discripter you want.

    Regarding some of the many positives surrounding the future of Energy Conversion Devices, you might want to look into its PRAM memory advancements. Just trying to help you get out in front on a story for a change.

    While you're at it, search "Uni-Solar Republic Services" and "PowerShingle" and "Uni-Solar Ispat". Just trying to help a brother out. As "fool"-ish as he may be. :-)

    I look forward to reading some of your upcoming posts on ECD and their subsidiaries United Solar and Solar Integrated.

  • Report this Comment On March 18, 2011, at 12:02 PM, TMFCop wrote:

    ecdfam,

    I think you need to check your numbers again. In February, ENER estimated it would produce between 27MW and 33MW.

    In the latest announcement, it said 25MW. So 25 / 33 = a 24.2% reduction. Yet even if it was an 18% drop, that's still significant.

    As I have no dog in the race in either case, I'm not looking to gain however you choose to slice and dice the numbers. Just don't get too wedded to your stock that you summarily dismiss opinions you don't agree with.

    However, I'll take a closer look at your suggestions. Who knows, maybe the next article will deem ENER the next wonder stock. ;>

    Rich

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