Solar Stocks Are Cheap -- Why?

The solar industry can't seem to catch a break. Politicians think that solar power is too expensive, investors think sales projections are too rosy, and even when oil and coal prices go through the roof they can't get any love.

Solar stocks -- Chinese firms in particular -- are trading at earnings multiples that are usually reserved for companies that are in decline. But this is solar, the next energy frontier. We're expecting massive growth. What in the world is going on?

Below are a few of the companies with head scratching P/E ratios.

Company

Trailing P/E Ratio

Forward P/E Ratio

Trina Solar 6.90 6.46
Yingli Green Energy (NYSE: YGE  ) 8.55 7.86
JA Solar (Nasdaq: JASO  ) 3.99 4.94
Hanwha SolarOne (Nasdaq: HSOL  ) 3.51 4.88
Canadian Solar 8.84 5.86
LDK Solar (NYSE: LDK  ) 10.69 3.94
Suntech Power (NYSE: STP  ) 6.22 7.85
JinkoSolar (NYSE: JKS  ) 3.59 3.12
Renesola (NYSE: SOL  ) 4.78 4.54

Source: Yahoo! Finance.

There are a few things that may be going on:

Market manipulation
This is the most popular theory from comments on Motley Fool solar articles. The theory goes that big, bad Wall Street is trashing these stocks so they can pick the stocks up cheap for themselves. I'm not privy to what Wall Street is doing, but I have a hard time believing there's some grand conspiracy at work.

The business isn't as healthy as it seems
Analysts have been telling us for years that sales are going to disappoint, putting pressure on margins and therefore lowering profits. Every few months we get a scare from a market like Italy or Spain that have feed-in tariffs out of whack with the market, and every quarter another market picks up the slack. Falling margins are something we should be concerned about, but I have yet to see this prediction come true.

The market doesn't understand solar
My theory is that the market still doesn't understand solar power yet. Investors have been following oil, coal, natural gas, and even nuclear power for so long that they can't get their heads around this whole solar thing. They'll point to its intermittent supply or its higher cost per watt than natural gas and dismiss it as a fad.

But they fail to realize that solar power is already cheaper than peak natural gas (the power source it should be compared against) and costs are falling rapidly. It will be years before the intermittent supply becomes a big issue and by then we'll have technology to fix that problem. I don't know if it will be compressed air storage, batteries, or something we haven't invented yet, but this is what engineers are for. They solve problems investors think are technological deal breakers.

Maybe it's one of these factors -- or all three -- but something is keeping solar stocks in the doghouse. I think they'll break out someday, but until the skeptics are convinced that solar is here to stay, we can expect solar stocks to trade at a discount to the market.  

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service. Click below to add your favorite solar stocks to your watchlist.

Fool contributor Travis Hoium owns First Solar and SunPower in the solar sector but does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (41) | Recommend This Article (21)

Comments from our Foolish Readers

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  • Report this Comment On April 21, 2011, at 1:23 PM, jad9000 wrote:

    Along the lines of your comments, name one source of energy where increased demand doesn't drive costs up. Nuclear - forget it. Hydro - costs for cement, rebar, turbines and everything else are rocketing. Coal-environmental costs, cost for coal, rising. Natural gas - higher demand will drive up gas prices. Gasoline - enough said. Wind - higher manufacturing costs are being mitigated by higher output, so a wash. Solar - demand keeps driving pricing lower and lower as suppliers reach economies of scale. This should not be a tough sell.

  • Report this Comment On April 21, 2011, at 1:28 PM, JCBMan wrote:

    I too have been watching solar for a while and if I may, I would like to add one point. Just before the last (current) financial crises began, solar stocks looked equally as tasty in terms of margins and ratios. But once the panic set in they got nailed and were very slow to crawl back to surface. In fact they only made it half way back and it has taken a year longer than everything else to do that.

    While I agree that any business that throws off this level of cash with PEs this low has to be worth a second look. However if anything, and I mean anything, causes a bit of a pull back in the wider market these stocks would become the steaming dung heap centerpiece of your portfolio. Yep they will look like a dung heap, smell like a dung heap and even taste like a dung heap.

    Best advice I think is to leave these stocks to the traders who have a taste for that kind of thing.

  • Report this Comment On April 21, 2011, at 1:37 PM, buzzltyr wrote:

    Wow finally someone gets it. Electricty free for life with a 10 year payback. Sounds like a pretty good deal to me. And we can finance thousands of jobs using the savings from electric bills.

    As far as the future they have triple the capacity in the pipeline that has already been installed in the last 30 years.

  • Report this Comment On April 21, 2011, at 2:33 PM, tasgolf wrote:

    How can you consider yourself a credible site for investors to glean information when you use Yahoo Finance as your information source? They are so far off from reality, that you do investors a disservice to quote them. You show LDK Solar with a trailing PE of over 10 when the stock price is under 11. LDK has earned $2.23 in the trailing four quarters, which would make their trailng PE less than 5. We would all be better off to get our info from someone who actually researches, before posting outdated data!!!

  • Report this Comment On April 21, 2011, at 3:17 PM, joeshmojo wrote:

    Part of the problem with solar is that some people think these are energy stocks like coal or gas. Energy stocks make their money finding and burning up finite resources.

    I think solar (and other forms of renewable energy) is better thought of as a tech stock. They make their money by providing the best, easiest, or cheapest hardware and software.

    In tech, you have to worry that the next best thing that soon comes along to replace it will make your tech (and its stock) instantly obsolete. This fear keeps the price low, since nobody is sure which technology will prevail in the race for utility scale solar.

    A similar problem was recently driving down the price of traditional spinning hard drive makers like WDC and STX in light of the coming transition to flash memory.

    Once investors start to realize that the transition will be slow and there is lots of money to be made in the meantime, stock prices for solar will rise as they have been for hard drive makers recently.

    Long solar (and hard drives).

  • Report this Comment On April 21, 2011, at 10:38 PM, SmartInvestor2 wrote:

    MANY STOCK QUOTE SITES LIKE YAHOO, FOOL probably SUCKS and TOO LAZY to update LDK earnings, their trailing EPS of 1.01 is OLD data. Look, LDK REPORTED 2011Q4 over 1 MONTH AGO but YAHOO/FOOL website STILL HAVE NOT UPDATE its TTM (trailing 12mon) EPS & many of you CALL YOUSELF AN INTELLIGENT INVESTOR OR STOCK ANALYSIST? Shame & MISLEADING PUBLIC, get the FACTS before you POST your USELESS INFO AS WARREN BUFFETT said that "There are NO Wall street HOT SHOT/analysist..." and Wall Street is a place where people RIDE on Limo taking ADVISES from broker/analysist who take BUS LOL, stupid and misleading that is!

    HERE IS THE UPDATE LDK EPS: YAHOO PEOPLE ARE LAZY TO UPDATE ITS EPS. Release Q4 earning around 3/17/2011 and now it's over ONE FULL MONTH (4/21/2011), the lazy web programmerS HAVE NOT UPDATE LDK Q4 EPS and MANY SO-CALLED BS ANALYSIST USE THAT "LAZY OUTDATED" EPS as their FACTS: yeah double check your data before CALL YOUSELF ANALYSIST/BROKER b/c you're MISLEADING public & give shameful ADVISE!

    Here is the UPDATE FACT: Google EPS updated!

    http://www.google.com/finance?q=ldk

    LDK 2010 FULL YR EARNS OVER $290M (EPS=2.16), forget (one analysis blame LDK deluded its EPS by too many 145M shares) & LAST Q4 earns over $145m or EPS=1.xx ALONE. ANYWAY, WARREN BUFFETT hints that LDK 2010 FY earns $290m but its MARKET cap is about $1.5B, that's PE=1.5B/290M=5.17, FORGET about many analysis blame how many shares LDK has (uncle Buffett said SO LOL).

    Look, uncle B & Steve Jobs also hint if LDK keeps on Q4 earning of $145m/QTR x 4=$580m/yr, using PE=10, it means LDK is ABLE have $5.8B Market Cap / 1.5B NOW=3.9X of your $. Usually a tech co. has PE 17-19 is norm, which means LDK if earns $580/yr x PE 17=$5B-$9B Market Cap is achieable. How many times is $7B from 1.5B now? U tell me.

    whoever makes the Polysilicon for OWN use will keep its price LOWEST=will win, those buy from other poly will loss; so far most solar co buy poly from 3-5 co., LDK is #2 (the #1 in China is not traded in USA but in HK. Do your homework. As Buffett said many people when free they read playboy magazine oh what a centerfold, I read co reports; ... u only know who is swimming naked/mislead by those Brokers/analsyst ...). UNLESS LDK mgmt is so stupid to run LDK into loss. So far, wafter price KEEPS up. IF LDK makes $290m in Q4 at wafer price ASP 80c and now wafer ASP over 85c, WHY LDK cannot make more $ than Q4 ($290)?

    THE WAY I SEE IT is 1) LDK have too many shorters. Those MARKET MAKERS tell you WRONG EPS info,etc. 2) THERE IS NOT SUCH A THING AS POLYSI OVERSUPPLY b/c polysi IS NOT like Banana that EXPIRED FAST by time. THE ONLY OVERSUPPLY can be this situation: when co. has too much debt that need LIQUIDITY then they must sell over-produced polysi at a lost: LDK poly cost ~ 58c, sell asp over 87c. So when many brokers said poly oversupply, smart u should said "what u mean? poly/wafer can STORE shelf live over 20yrs? Only Banana gone expired/bad so hurry to sell at a lost. ONLY DUMB MGMT will run a good company into loss. I onced told LDK how to run their co. If I ask give me $1/yr hire me almost for free, just give me 1m or 3m stock shares, I can turn LDK or your company into big success (said the same like Steve Jobs: APPLE in the stupid mgmt before Jobs never produce any fancy gadgets). Buffett said he loves a company runs itself so good even a dummy can run it lol.

    I'm LONG on LDK. I only did NOT like is LDK has a crazy ambitious expansion plan that has many debt. If my Uncle China gives me $9B debt as a backup plan, I would NOT worry 2 much to run LDK in debt for now LOL.

    LDK into debt b/c of that costy poly plan, which makes them Unique: whoever produce poly at a profit will win, those other solar co bought from others will not win. I told LDK mgmt 1.5yrs ago STOP selling poly to module or suppliers at a lost. IF YOU MAKE OWN FLOWERS, be CREATIVE BE THOMAS EDISON OR STEVE JOBS USE THAT FLOWERS MAKE YOUR OWN BREAD. I email LDK mgmt said stop any contract sell to other co at a loss, avoid any contract if have to b/c everybody here is to make $ not help others. Make self module and final products. If LDK hire me just $1/hr, I can sell tons of modules over $2/watt (that's yr ago I msg 'em). I did NOT know if they read my advise email.

    When labor, gas, oil all goes up, go ask God or Sun for energy is a good green idea: it's green, it's from God=free if there's sunlight, the only cost is upfront cap. I wish I can open a business to kill those solar installer who charges $3.5/watt while the module is only $1.8x/w. Someone in the line are sucking big $. I've ways to lower that final solar installation cost under $3 or so. The world do not have too many Steve Jobs or super CEO or Bruce Lee or Jackie Chan: u getta has will power, believe u can win/run the co to profit. How can solar co module sell at $1.8/w but let the installer POCKET $3.5/w, which STALLS the pace of solar installation. Aiyaya. If I were LDK mgmt, I getta tackle those problem: the end-user is charged $3.5/w = making solar cost more than nuclear, wind, coal, etc.

    Anyway, words of wisdom: guys, ask HOW MUCH IS A HUMAN LIFE WORTH? Nuclear, coal/oil can be cheap UPFRONT but how MUCH is aftermath clean up & animal & HUMAN LIVE WORTH to u? Solar has no moving parts, it's green=God/sun gives us energy. After the cost of TRANSMISSION Lines, HUMAN & animal LIVES/cancer/radiation/toxic land unfarmable 3+ yrs, SOLAR is cheaper: I thought life is PRICELESS?! Time to kick the mid-man solar installer who charges $3.5/w. I believe I can make energy conversation device VERY CHEAP under $0.3/w or so. THAT IS LOW TECH. BUY LDK, BUY,BUY,BUY, DON'T LET stupid analysist/brokers or market makers mislead u. Q4EPS=1.00 x 4 =4 for 2011FY, LDK=$40 if PE 10.

  • Report this Comment On April 22, 2011, at 3:26 AM, MartinSamuelson wrote:

    What an epic post by SmartInvestor2

  • Report this Comment On April 22, 2011, at 3:30 PM, Gato337 wrote:

    i think that most technololgies under the "renewable energy" umbrella will be in limbo for at least the next decade or two.

    Right now, all of the available options (corn ethanol, sugar ethanol, wind, solar, geothermal, hydro, etc) have serious limitations that make them less efficient, less economical, and/or less desirable than fossil fuels in terms of becoming our future primary energy source.

    The next 20 years will see a battle between innovating energy sectors and its still extremely uncertain how it will play out.

    I am leaning towards the theory that our future primary energy source will be something that hasn't been discovered/invented yet - either that or we'll finally crack nuclear fission.

    Ultimately though, I currently think solar is still a very speculative buy - sure the industry will continue to grow over the coming years, but there are so many different competing companies with their own designs and innovations, that its hard to predict which stocks will be leading the pack in 15 years. But what the heck, the stocks are cheap! and a Foolishly wise investor with a sunny disposition could make a killing if they pick right!

  • Report this Comment On April 22, 2011, at 6:01 PM, buffalonate wrote:

    I like Yahoo Finance because they have analyst expectations for every stock. They are usually about a quarter behind when it comes to updating their info though.

  • Report this Comment On April 23, 2011, at 3:23 PM, xetn wrote:

    If solar were a truly viable energy source, it would not need massive amounts of government subsidies and all the major energy companies would be all over it. They are not.

    The plain fact is that most solar solutions do not function all the time. No wind, no energy, no sun, no energy, etc. If you were having an operation, would you want the hospital to be using solar?

    I am not saying there is no place for solar, it just has not, nor will not gain traction until the gaps are closed.

    The biggest and best "green" energy is dead since the Japanese earthquake: nuclear. But not in other countries: France, China, etc. but not in the US.

  • Report this Comment On April 23, 2011, at 3:43 PM, ET69 wrote:

    Calling nuclear energy "green" is as Orwellian as it can get. If you still think THAT - after everything that has happened in Chernobyl and Fukushima then you are a hopeless lemming. Solar , Wind, Wave ....that is ALL we need. The future is already HERE - so lets get on with it.

  • Report this Comment On April 23, 2011, at 4:19 PM, mhy729 wrote:

    James Lovelock, the environmentalist who propsed the Gaia hypothesis and accedes to the scientific consensus that anthropogenic global warming is happening, has said that "only nuclear power can now halt global warming". In his view, nuclear energy is the only realistic alternative to fossil fuels that has the capacity to both fulfill the large scale energy needs of humankind while also reducing greenhouse emissions. He is an open member of Environmentalists for Nuclear Energy. [from Wikipedia's entry on James Lovelock]

    I guess he's a hopeless lemming too, and Orwellian to boot.

  • Report this Comment On April 23, 2011, at 8:50 PM, jsIRA wrote:

    The problem with solar stocks is the future supply.

    Many more firms in China started adding capacity and in huge scale. Those companies are private companies or listed in China not in USA.

    I see no article reported this problem. But I do have read few such articles written in Chinese.

    Another problem: solar companies all need huge amount of capital to add capacity. If the future demand is not strong as predicted, those capacity will cost big problems.

    I am only putting money in 1-2 solar companies at the moment.

    It is a saying that if picture is too rosy, be careful.

    It is something similar to Harddisk oversupply problem in 1980s.

  • Report this Comment On April 24, 2011, at 12:02 AM, xetn wrote:

    et69: there are over 400 nuclear power plants world-wide. There have been two real failures. Both were not current technology. It is stupid to conclude that nuclear is not green because there are no emissions. But dream on about solar.

  • Report this Comment On April 24, 2011, at 12:42 AM, PeyDaFool wrote:

    xetn,

    Excuse me? Nuclear has "no emissions"? What do you think they do with all the "green" nuclear waste products? Many of these byproducts have a half life of tens of thousands of years. We're scouring the earth looking for places to dump all this nuclear waste. Maybe we can bury it in your backyard?

    Another bone to pick with you: You said, "no sun, no solar"? What does that even mean? The sun has been coming out faithfully for 4.5 billion years. Even on cloudy days, your solar system will capture about half of the sunlight disbursed through the clouds. Solar is incredibly reliable.

    "If you were having an operation, would you want the hospital to be using solar?" This is a completely misguided statement. Solar systems generate electricity and the energy companies store it and distribute it to their customers. If the power goes out, the hospital draws it's power from the grid, not from a solar system.

    Please research your statements before putting them out there for everyone to see. You may find your foot will be in your mouth less frequently.

  • Report this Comment On April 24, 2011, at 7:15 PM, motmilo wrote:

    Here's a truth...understand it......the texas slimeballs, ( you may have a clue who they are), crush these stocks and any energy alternatives..and will do so, until they can't make the ungodly profits from oil that they have been making, and that will only happen when/ if the supply is is ever depleted.

    If you don't think the sleazy powers in charge manipulate every and any stock that competes with oil, you're as naive as an infant.

  • Report this Comment On April 24, 2011, at 7:31 PM, motmilo wrote:

    It's also funny funny how the "Motley Fool" likes to start out bold with the headline "Market manipulation" but hasn't the balls to follow it up with anything substantial, and even cowardly backs off with " have a hard time believing there's some grand conspiracy at work."

    Grow some balls Motley or find a new line of work.

  • Report this Comment On April 24, 2011, at 7:53 PM, qwizwizard wrote:

    There are a few snags in the works that require some assistance from local, state and Federal government.

    1) Few states have legislation that will overturn a Homeowner's Association denial to allow solar pv panels on resident homes. Florida has excellent legislation in place, but the baton needs to be passed to more states. Most HOAs won't allow solar panels based on aesthetics alone. Typical HOAs, power to the few.

    2) Federal and State rebates are available but they are being gobbled up by commercial buildings because legislation does not support overturning an HOAs denial to place solar pv panels on residential homes.

    We are in such a battle right now with our HOA. We are writing to our local, State and Federal legislators with the expectation for them to adopt similar legislation (as that in Florida) because with it, residents are being denied their right to opt for solar pv power. This is America, folks. We should be protected from HOA zealots who are power hungry and yet unable to make a decision that might tarnish their popularity in the neighborhood.

    Please support legislation to help homeowners overturn HOA bans on solar pv power, and watch the stocks go up.

  • Report this Comment On April 24, 2011, at 8:35 PM, megawatt92 wrote:

    Consider the energy density of solar, and let's be optimistic:

    Use:

    1000 watts/sq meter available solar radiation

    15% PV efficiency

    =150 watts/sq meter

    Americans use aproximately 250 kilowatthours/day (transportation, heating, eletricity, etc. Everything)

    So to go completely solar PV, everyone would need 70 square meters of PV's. But they don't work at night, so double that to make twices as much during the day.

    So 140 square meters of PV for each person.

    Now scale that up to let's say Chicago's population of 8.5 million

    That means to power the citizens of Chicago, you would need about 415 square miles of PV's. Maybe you could cover 80% of that area with actual PV,s so you would probably need over 520 square miles of PV. That's huge! A square 23 miles on a side.

    I guess it is possible to build but things are going to have to get very desparate before the political will is available to eat up that much land area.

  • Report this Comment On April 24, 2011, at 10:16 PM, dividendgrowth wrote:

    If you see an industry with hordes of cheap Chinese knock-offs, nobody is going to make any money except insiders.

  • Report this Comment On April 24, 2011, at 10:17 PM, dividendgrowth wrote:

    Besides, can you trust their books?

    Also, don't forget that subprime lenders also had low single digit P/Es before their quick march to the oblivion.

  • Report this Comment On April 25, 2011, at 4:35 AM, SmartInvestor2 wrote:

    LDK EPS=$2.16, it's amazing they made $290M in FY2010 as the HIGHEST earnings in making since IPO (making more $ than in 2007 which LDK stock hit over $70), but their stock is NOT reflect as highest level in 70$ era: that is LDK makes $290m in 2010 which makes the most $ in the record yr yet LDK stock is NOT even traded over $70 like they received the "loved" back in 2007 :) here are the last several yrs $m in making and BTW, LDK keeps profit margin better & better, reducing cost every qtr & their future looks VG = expect sales $3.5b-3.7B in 2011 with 24% (to 27%) gross margin=$3.5b x 24% at least=$840m gross, assume - $240m in all other costs (EBITA,etc), it should give at least $500m-$600m net earning; using $580m as net earn, then divides by 145m shares=$4 EPS for FY2011 (that's almost 2x of what FY2010 EPS=$2.16) , with PE 10 x $4 EPS=stock @ $40; or A VERY NORMAL PE of 13 for a tech x EPS $4=$52 a share is possible.

    OF COURSE, unless the LDK dummy managements run the ONE of the world #2 polysi plant into loss, then the idiots mgmt only know good for always borrow tons of debt + sell own stock and bragging LDK plant is 1 of the world BIGGEST plant which takes a BMW drive 3 hrs to finish the site:)

    Currently, people concerns about LDK for $1.5B debt (or so), but NOT TOO worry too much b/c LDK plan to do a polysi division IPO in HK. LDK's balance sheet hold its Poly Plant worth over $2B asset, if they SELL portion of this plant asset thru an IPO in HK, it generates at least $1B cash which makes LDK balance sheet back to Healthy again: all the ratios look good again. Buffett hints that he bought BRK.A or some company knowing it holds more asset than its total market cap (like the case of LDK which holds over $2B plant but its market cap only < $1.6B), even sell off its plant/equipment still a worthy buy.

    LDK makes the most Record earning in last 5+ yrs and it keeps future look better (again unless the monkey mgmt is so dumb then they run into red again; but from last news, LDK expands into LED market & sell gas which was the FIRST again, that means their mgmt are NOT idiot, I hope. I told them if you have flower, why be poor or do not know what to do with your flower? be creative, you can build bread or cake or whatever the market wants. You have $2B poly plant able to produce over 21,000MT in FY2011 as expected, why fear of shrink demand if u r smartly diverse: LED market also uses P-N junction diode-like LED: LED and PV are very similar P-N structure. The mgmt seems smart as myself can see, their direction seems right). If Italy or solar demand less, which UNLIKELY esp after Japanese nuclear kills many & TOXIC radiation ruin the land (some takes 1,000yrs for land to abserve the chemicals; it's getting late ZzZZ, my brain is tired to type up all details so I skip), LDK weather well with demand from LED & industrial gas sell business. it's said LED market is also another billion dollar mkt by itself. Good job LDK! I was an electrical engineer and now a CEO of my own small company so I would run a company with creative solution like that. A dumb president would run a great nation like USA into red near bankcruptcy, said by Warren Buffett (he loves a co. runs itself so good that even dummies can run b/c someday it will and USA is a great country as a company, but it was run by dummies or someday will, LOL).

    I said if you give me power or mgmt, I try my best to make VG decision to make company or the group or teamwork in big success, it's mgmt's job.

    Anyway, here is the LDK last n-yrs $ in making: FY2010 with $290m making by far is the best yr but LDK stock IS NOT reflect to highest price (that means yrs ago LDK stock hit $70/share=its PE must be over 50 or 70, now it's only 5?! Mr. Market is stupid & sick said by Buffett):

    Sales EBIT Depreciation Total Net Income EPS Tax Rate (%)

    12/10 2,509.35 362.68 0.0 290.8 2.2 18.26

    12/09 1,092.53 -254.91 67.33 -234.23 -2.18 0.0

    12/08 1,643.5 71.55 34.83 66.41 0.61 7.18

    12/07 523.95 143.3 13.54 144.06 1.37 -0.53

    12/06 105.45 30.07 2.77 30.18 0.35 -0.38

    12/05 0.0 -0.31 0.0 -0.27 0.0 0.0

    I am LONG on LDK. If LDK makes EPS $4 x PE 13=52$ a share in 2011, then it's 5x of its price traded at $10.xx now! I already hold too many shares of LDK now. Mr. Market is totally sicked/blind?!

  • Report this Comment On April 25, 2011, at 4:54 AM, SmartInvestor2 wrote:

    Oh forget to mention: IF LDK can produce $580m (or so) in FY2011 as they expects and keeps the level of income every yr since DEMAND for SOLAR just for CALIFORNIA (?the AB32? which signed into LAW that 33% of ALL CA electricity must generate from alternative/renewal sources by 2020=just 8-9yrs from NOW ONLY, and that 33% seems exceed ?33GW or 60GW = sorry it was 1:40am, I did my homework but it was too late to give u free Warren-Buffett-like tips b/c I want to ZZZZ lol, so I cannot remember my magic xx GW=33% CA all electric needs on top of my tired head LOL). Since CA signed into law for next 8-9yrs demand alternative=booms... AND IF LDK can keep on producing that $580m a yr, GUYS AND GIRLS, DO NOT WORRY about $1.5B debt LDK holds b/c within 4 YRS x $580M/yr LDK if can earn that EXCEEDS $2B in making within 4yrs, that means within 5yrs IF LDK can earn $0.5B/yr, it should pay off all $2B debt, assume if the MGMT IS NOT A DUMMY MONKEY that is :). So NOT to worry too much about $1.5B or $2B in debt IFF (if and only if) the mgmt is another super CEO as Steve Jobs. I want to be a good CEO myself too but I just do NOT have the power or here is a Jay Leno joke said "girls or Apple mgmt, give youself to me, then I will make you rich. If you do not give Apple mgmt to me, I cannot save u or help u - the fact is Apple NEVER produce any fancy Iphone, Ipod, Ipad in last 10yrs NOT UNTIL Steve Jobs was in charged!".

    Don't let fearful stupid analysist or brokers or Market Makers or shorters fear of you. I just give u some light: IF LDK can earn $500m/yr, then 4yrs can produce $2b to pay off ALL OF THEIR DEBT, of course assume under super mgmt. Happy sleep tight, take care! "The only fear is the fear of youself", buffett addes "be Greedy when others fearful; be fearful when others greedy". I always wish people trust me turn their $ to me we found partnership and I can give them 15%/yr or more: buffett said many OTHER boys read playboy magazine when they're FREE, we read and THINK TOO MUCH on how to make $ and the hardest is crazy mgmt's emotional control. Happy ZzZz now :)

  • Report this Comment On April 25, 2011, at 5:31 AM, marc5477 wrote:

    There are no issues with solar as a technology but there are lots of problems when it comes to investing in that technology.

    These stocks have some problems.

    1 - Price to deploy the tech is currently too high per watt

    2 - As prices fall so does profit margins

    3 - Tons of competition

    4 - Chinese companies are extremely risky

    5 - Solar efficiency needs improvement making footprint an issue in some places

    6 - Battery technology still expensive

    7 - Power companies are ripping off solar customers

    Those are some of the issues.

  • Report this Comment On April 25, 2011, at 10:59 AM, Gato337 wrote:

    marc5477 sums it all up quite nicely. kudos!

  • Report this Comment On April 25, 2011, at 11:47 AM, PeyDaFool wrote:

    very good points, marc5477

  • Report this Comment On April 25, 2011, at 1:11 PM, xxyyzz001 wrote:

    Hey marc, then why is FSLR trading at 20 P/E? More likely it's a racist attack on chinese companies (jews again).

  • Report this Comment On April 25, 2011, at 1:16 PM, fennecfoxen wrote:

    Why are they cheap? Easy. Political risk. You're not investing in the free market, but in the politicized market. I don't say this as an ideological thing, but a practical one: Politics are risky, speculative affairs. Will Congress keep up solar subsidies or impose new carbon taxes? Heck if I know!

    Are any of these companies a good investment on an earnings-before-politics basis? Dunno either, but I'll bet they don't look quite as compelling sans subsidies.

  • Report this Comment On April 25, 2011, at 2:27 PM, jargonific wrote:

    Earlier in the day there was a report that a drop in the cost of silicon would benefit Chinese solar companies. If it benefits them, why now a US company like Sun Power? Wouldn't US investors improve their own chances too by investing in US companies? There should be a concurrent demand that the US Government offer incentives to US providers of these technologies as opposed to giving the trade to China or other countries. US for solar, US for charging stations for electric cars. If US tax dollars were used by prop up GM, then US taxpayers should benefit from the rise in their electric cars, not a Tel Aviv based research group.

  • Report this Comment On April 25, 2011, at 2:30 PM, jargonific wrote:

    The company I was referring to above is Better Place, which is setting up charging stations all over the world and has R/D based in Tel Aviv. It has 'offices' in CA. So again a foreign company benefits from State and Federal Tax Incentives. With a capital WHY?

  • Report this Comment On April 25, 2011, at 2:56 PM, chaz572 wrote:

    megawatt92,

    "A square 23 miles on a side" is absolutely peanuts compared to the amount of land in Arizona, New Mexico, Nevada, Wyoming, and several other states where the sun shines brightly all day long on nothing but dirt, sand, and the occasional succulent plant and lonely lizard. If we built current generation solar technology over all of that otherwise unused land that nobody cares about, we could light up the entire United States five times over. All that is missing is the electrical transmission and storage capacity. When that appears, solar really will be the answer. And guess what. As a bonus, the electrical transmission and storage makes wind viable as a primary source, too.

  • Report this Comment On April 25, 2011, at 10:23 PM, maiday2000 wrote:

    chaz...nice try...it will never get off the ground. There are already lawsuits about these kinds of "power plants" from environmental groups because of all the endangered species that it kills.

    Solar has been the energy of the "next 5 years" for 30 years now and has yet to come to fruition. It isn't cost efficient and won't be for years or even decades. It is dependent on government subsidies, much like ethanol, and you can't invest in companies that are dependent on subsidies when government cash is drying up.

  • Report this Comment On April 26, 2011, at 3:50 AM, SmartInvestor2 wrote:

    oh btw, did NOT u heard about us gov also gives TONS of TONS of subsidies to OIL industrial too? Even Obama bashes saying that Oil industrials are doing fine without subsidies then try to reduce subsides.

    Personally, I think after weigh in the cost of cancer, health, toxic clean, unfarmable lands n-yrs and the cost of human lives & animal lives from using OIL, coal, nuclear plan, the cost of solar or wind is much less... imagine if a nuclear wipe out 20 miles all homes, all farming & (fishing) industrial and causes 10,000 people cancer or health problem for rest of their lives and USA medical fee is heck costy (taking bills for rest of 10k ppl's lives or USA hospital operation fee can over $100k per month x 10k such victims), how much are human lives & animals & enviornment clean up of taxic, aftermath of nuke, coal & oil clean-up (did u watch ABC or NBC news reported that there are more OIL contamination than we assume: a whole valley was abandonded/move out b/c of oil contamination), add that cost to Picken's plan:

    When I asked how much is a human life worth? some said gov do NOT care how much a human life worth, they still LOVE to build more nuke plants both in USA & China and not totally ban in Europe yet -> b/c of cheap cost UPFRONT, they continue want nuke at the risk of future human lives loss. And when u ask how much is a human live again, then some crazy people said they/USA gov't do not care about human live cost, whenever A SMALL COUNTRY causes OIL price up EXTRA $20 per barrel x USA imported 11M barrels a day x 365 days a yr =that's $80B/yr GIVE AWAY to oversea (mid-east) countries so USA gov always START WAR-FOR-OIL again whenever a country causes oil up EXTRA $20 (from $80 or $90 now it's over $110/barrel)... u know everybody knows ppl & some even CIVILIANS will die from WAR=PEOPLE DIE, but gov ain't care human lives worth, they said if the declare war on Libya or any small country spend $8B if able to bring oil price down $20, it saves USA gives away $80B/y x 10yrs=$800B: WAR FOR OIL=gov kill people FOR THE OIL or money!

    Gov also gives tons of subsides to oil companies too and personally imagine if we use that $300B (half of Picken's Ad claimed) to BUILD SOLAR or WIND plants, boy we can help ourselves so much: 1) instead of GIVING AWAY $300B or $700B away to other COUNTRIES [and borrow $1T from China], we use that (50% of) $300B to build 100GW assume $3/watt: it is locally built so it creates tons of jobs; 2) and once we spend $300B/yr or next few yrs build our solar/wind plants, THESE plants can serve us for next 20yrs, which means WE WASTE $300B to build but we depend on our own plants NOT foreign countries. If I were the president or the project leadership for a speech, I would edu public said "politicians, read my lip. Warren Buffett said $ spend WITHOUT return is called WASTE and $ is used with reasonable/good return it's called INVEST $ NOT waste. So don't let the other parties or naysayers stop to build our own plant. BUILD, BUILD, build like China for own Infrastructure: yes ppl critics gov spend $300b on green tech but once we built, we can ENJOY party for next 15+ yrs; it creates jobs and we become ENERGY Independent. HOW CAN THE WORLD SUPER POWER USA country LET foreign countries HOOK/drag our nose like energy slavery: do NOT hate CHINA lend usa $1T b/c everybody has savings or extra $ can buy USA bond. America, borrow $1T from China is NOT worst than GIVING AWAY $7Trillion in last 10yrs to oil foreign countries as Picken Ad claim. How can the world great power USA has most nuclear weapons but let the few APEX group sets oil price & we become ENERGY slave let them drag our nose? USA we should thank China lend us $1T to solve our LIQUIDITY problem: America, we've big problem: why WE STILL MAKE POLITICIANS make promises THEY CANNOT KEEP: YES WE CAN?! are u sure? AMERICA WE'VE TOO MUCH ENTITLEMENTs (so much freeloaders can make a living that they do NOT even eager to work hard=gov Liability). China is not our biggest problem, our biggest problem is our own DEFICIT or how to deliver Entitlement promises: watch I.O.U.S.A & watch RICH DAD. ".

    http://www.youtube.com/watch?v=R2bOug1d20c

    http://www.youtube.com/watch?v=VpVUTSgPQfg

    And if I were LDK mgmt, I would take the polysi plant to IPO = sell 49% (or so) of this $2.xx Billion plant, that would generate over $1B cash pay off some debt, which rumor said it is what LDK plans to do. After sell portion of its ASSET holding, it creates $ for liquidity. IF FSLR trades at PE of 20, why NOT LDK? If so, LDK 2.16EPS x PE of 20=43$ a share. I think IF GIVE AWAY $700B/yr anyway, why NOT invest HALF of this $350B/yr on green tech - at least GIVING $ AWAY is WORST than GIVE $ to OURSELVES BUILD our own economy & giving citizens jobs & the plants we built can last next 20yrs = we be energy free for n-yrs or at least import 30% or 70% LESS from foreigners. CAN U BELIEVE other countries call our beloved USA as "paper tiger", looks good on the paper but indeed a shallow country with nuclear weapons yet LET SMALL countries DRAG our nose for energy slave & small countries laugh at our bad leadership said "shame". Indeed, even China is MORE PRO-GREEN and China become world #1 in solar.

    American especially CALIFORNIANS, when you see the politcians=captain of the Titanic drives the Titanics down in red or SINKS and many cities has no $ and CA has huge deficits + CA has huge UNEMPLOYMENT rates & many cannot even keep foods on table, jobless=cannot keep a foreclosured home=many become homeless BUT the CAPTAIN (politicians) in CA still DO NOT CARE job creations and employement nor worry many lossing homes/foreclosed and become homeless, the captain only said Gay Right is HIGHEST priority, let's keep on fight that gay right. When you see corrupted captain like that (when the CA TITANIC leaks or sinks with big holes, many loss jobs and homes, people are dying or be homeless, but the captain we VOTED for ONLY ENCOURAGE its passanger=citizens focus on let's have more gay RIGHT as HIGHEST priority more than job & economy)... then you know something gone wrong. AMERICAN, do NOT forget the power of CITIZEN is more than the gov or CA court: For the ppl, OF the ppl, from the ppl: citizens we give them power, if they do NOT best represent us, we CAN VOTE THEM OUT FIRE THEM. We do NOT need a captain do NOT care the Titanic sinks and still encourages on people "keep on fight on gay or redefine marriage (that kind of crabs)". How can our STATE OR COUNTRY be good if WE CITIZENS let them abuse power?! CA court has been spend too much gov resournces, time and money on gay debates over last 10+ yrs in CA and are the CA ppl stupid or what? They do NOT know people's voice is BIGGER than CA court? You dO NOT let COURT over-rule the people's voice. Judge or court is NOT above people's voice. We give them power, we can also remove their power. Sadly, too many ppl are stupid or do not care or simply BLINDLY trust their "YES WE CAN" politicians! That makes we BE ENERGY slave & "paper tiger". We need to fire bad leaders! China is more pro business and pro solar/green than USA now=sad!.

  • Report this Comment On April 26, 2011, at 7:01 AM, marc5477 wrote:

    to xxyyzz001:

    "Hey marc, then why is FSLR trading at 20 P/E? More likely it's a racist attack on chinese companies (jews again)."

    Uhm first its trading at PE 17 and declining. FSLR is considered by most to be the premier solar company in the world because they are positioned best for large contracts in the US and Europe.

    For the record I am not Jewish nor American born but I do consider myself a fan of America in many ways. I like China too but they have serious problems over there.

    When it comes to business, you simply cannot trust China. The government can walk in at any minute and nationalize or regulate whatever they want and no one can fight them. Look what happened to Google and other Foreign companies that try to do business there. Look at their monetary policies. The government in China is 10x more corrupt than that of the USA and that, imho, makes them a horrible place to invest unless you live there and are on their good graces (you brown nose them aka bribe them to leave you alone).

  • Report this Comment On April 29, 2011, at 12:18 PM, SkepticI wrote:

    Layers and layers of risk....heavy subsidies to make it "economic" (I use the term loosely) lots of confusion about what the real numbers are...many competitors quite a few still in startup mode. Fold in significantly less than transparent reporting, problems with basic efficiency and physics, not to mention the storage issue and capital costs many times alternatives, you have a recipe for lots of choices, lots of losers, and maybe NO winners when all is said and done. This is why the market as it were demands such high returns...maybe not high enough even so.

    You should really think hard about Megawatt92's simple calculation based on insolation of 1000 W/sqmeter, 1Kw/sqmeter, at today's average efficiency (quoted as 15%, a little generous I think)

    This means that a full up install, with inverters, wiring, panels, etc. to be comparable to today's alternatives needs to get to something less than $ 10,000.00 - Average use 10 Kw X 24 hr to get to MW92 estimated 250 Kwhr near enough. Systems today are 3 to 10 times that much depending on who you believe and what subsidies you include. A LONG WAY TO GO, and that does not solve the storage issue.

    An alternative analysis you might consider: Even today with very low (comparatively) energy prices SOME homes can afford or do better to be off the grid on solar...if you have to invest high $ in wires (say 2 miles to get to where you want to use it). They STILL have a major storage issue. This says we are not far off on a total system cost basis, but far enough that winners and losers wont be clear for a long time.

    We don't yet have a clue what winning technology looks like in the collector arena, let alone storage or conversion (inverters). If some brilliant physicist succeeds in "holographic concentration" above a PV cell at low cost, that enterprise will eat the lunch of all the others. If some brilliant industrial Engineer figures how to make PV's at declining prices like Intel did with memory chips, so they are nearly FREE on a $/kw basis (or even 100 times less, say $10/kw) that enterprise will eat the lunch of all the others.

    These are all revolutionary ideas that have been proposed, but not yet proved real. Just think back to the Auto revolution....invest in Ford or GM, you win....invest in Studebaker, well who knew?

    i've been in the electric energy space since 74...run nuclear reactors for Rickover, PGE developed and built incredibly efficient Cogeneration plants on gas turbine technology. Had you picked B&W or CE as Nuclear technology winners (a better understood economic and technology model than PV right now) you would be sadly disappointed.

    "unbelievable rich multiples" don't begin to make up for complete failure of some even if you are diversified. BEWARE.

  • Report this Comment On April 29, 2011, at 12:19 PM, Santhoff wrote:

    Physics is Physics, two plus two will always be 4 no matter how many experts and analysts one can get to say it is some other number.

    Solar energy makes for a great theoretical source of free and clean energy but then the real world has to be figured in.

    Solar cells efficiency is ~15% meaning for every 100 Watts of energy that falls upon a solar 85% is wasted and converted to heat with less than 15% actually being converted to electricity.

    Then the DC voltage generated from these solar cells has to be stored in batteries. These batteries have to be changed out every 4 to 6 years at a cost of thousands of dollars. Then the stored battery energy has to be converted from DC voltage to AC voltage to feed the home. Take the storage losses from the battery and the DC to AC converter and the lose another 5% of the original 15% and now you are down to less than 10% of the original 100 Watts. That hundred watts of solar energy is now 10 watts going into the home.

    Also calculate that the solar cells 15% efficiency is at their peak only when they are new, every year after that they will lose a few percentage points of efficiency so that by year ten they are only ~10% efficiency producing 30% less energy. By year 15 to 20 efficiency is less than 6 or 8% and the solar cells nee to be replaced.

    Start with the original cost of the system. Add the cost of battery replacement every 4 to 6 years. Factor in the decreasing power output every year as the system ages. Take away the tax incentives and then you see the real costs.

    Don't get me wrong I like the idea of solar, but in order for it to make real sense as a replacement for more traditional energy sources it is going to require a breakthrough that will increase efficiencies to something greater than 50%.

  • Report this Comment On April 29, 2011, at 2:56 PM, dcorley wrote:

    Hey, I'm handy. Ill just buy some solar panels and install them myself. Oh, wait, I live in California.

  • Report this Comment On April 29, 2011, at 7:47 PM, Winnerfrommidlan wrote:

    Now I know that physics is physics, but 2 + 2 is math. This thread started with Motley putting out 10 solar stocks with low PE's. Well this isn't hard, they were all Chinese. Chinese stocks listed on U. S. exchanges have low PE's because of political risk and fraudulent bookkeeping risk. Where has Motley been ? Look at First Solar and Sunpower.

    My second point is people use the current cost differential to compare solar and natural gas,

    but if you install solar at current prices, they will be the sama ten years from now but thenatural gas will double.

    My third point is about global warming. If you dig stuff out of the ground and generate heat, you contribute to global warming, whether its oil, coal, gas, or uranium. Yes, CO2 contributes to global warming, but so does the heat you generate. Learn about energy balances.

  • Report this Comment On April 29, 2011, at 7:48 PM, billstanley1 wrote:

    In 2008, the world’s nuclear electricity plants generated 80% of their capacity, compared to only 8% for solar. Solar plants do not seem to work when the sun does not shine and it is not feasible to store electricity to use when the sun is not shining. That is one of the reasons why nuclear plants generated 13.5% of the world's electricity and solar plants produced 0.06%.

    Even though mother nature does not charge for using wind or sunlight, electricity generated from these sources is very expensive. In 2009, the average costs of electricity supplied by Southern California Edison (SCE) from nuclear, coal and natural gas were 0.56, 1.59 and 2.85 cents per kilowatt-hour, respectively. Comparatively, the costs from wind and solar were 6.37 and 13.93, respectively. Electricity from solar cost 25 times the cost from nuclear and 5 times the cost from natural gas. www.newsandopinions.net

  • Report this Comment On April 29, 2011, at 9:41 PM, esotericevets wrote:

    Perhaps the lack of reliable storage will not be important. Flex scheduling, timed charging of car batteries, sine wave climate control temperature acceptance, and variable electric rates integrated with smart meters are a few methods to render the lack of storage moot. The covering of desert areas with panels might make these areas more ecologically diverse and allow for a greater biodiversity than those blasted wastelands now support. Those blasted areas are probably going to get ever larger as we fail to take action. If I could just live a few hundred years longer, I would find a way to go long Antarctica and Greenland.

  • Report this Comment On July 03, 2011, at 4:44 PM, jfrankh57 wrote:

    @On April 29, 2011, at 7:47 PM, Winnerfrommidlan wrote:

    "Now I know that physics is physics, but 2 + 2 is math. This thread started with Motley putting out 10 solar stocks with low PE's. Well this isn't hard, they were all Chinese. Chinese stocks listed on U. S. exchanges have low PE's because of political risk and fraudulent bookkeeping risk. Where has Motley been ? Look at First Solar and Sunpower."

    Yes, What about the issues with Chinese fraudulent stock manipulation....not to mention the COMMUNIST government who has a history of kicking capitalism in the teeth.

    "My third point is about global warming. If you dig stuff out of the ground and generate heat, you contribute to global warming, whether its oil, coal, gas, or uranium. Yes, CO2 contributes to global warming, but so does the heat you generate. Learn about energy balances."

    Global warming...does the fact that the population of the world has arrived at just under 7 billion this year have anything to do with heating up of this ball we live on? That is double what it was in in 1960 and it is projected to be over 10 billion by 2050...how hot can it get?!?!?!?

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