What the Market Taught Me This Week

It was a short week on the market, but that doesn't mean there weren't plenty of moves for the 10% Promise Team to mull over. Here are two that caught my attention.

Solar investors will cling to anything
When Germany announced last weekend that it will close all of its nuclear plants by 2022, solar stocks took that as great news. LDK Solar (NYSE: LDK  ) led the charge, jumping 10%, and competitors JA Solar (Nasdaq: JASO  ) and Trina Solar (NYSE: TSL  ) also rose sharply.

I'm a solar investor, but these kinds of moves just show how jumpy we can be. Dangle a shiny penny in front of us and we'll leap over tall buildings to get it.

The move in Germany doesn't guarantee that solar energy will be an even bigger part of the country's energy portfolio. Germany is the world leader in solar, and more than anything, this may only mean that demand won't drop significantly in the next 10 years. I would be much more excited if the United States, China, or India gave some concrete incentives to increase demand instead of speculating on what a declining nuclear industry means in Germany.

But we're solar investors. We'll jump on anything.

No one gets a discount on these stocks
Ready for my mind-blowing, paradoxically ironic revelation of the week? Online discounters have the most expensive stocks on the market.

Want to buy into travel and local-deal maker Travelzoo (Nasdaq: TZOO  ) ? That'll cost you 10 times 2010 revenue. How about jumping into the upcoming Groupon IPO? A measly 28 times 2010 revenue sounds about right. Sure, revenue here is growing at an astonishing rate, but you can forget about a profit any time soon. Even LinkedIn (NYSE: LNKD  ) , which came public recently, traded for more than 40 times sales on its opening day.

I'm not sure if this means we're heading for another bubble in Internet stocks, but it sure does show how much investors will pay for an explosive growth curve.

I am smarter than I was last week … or so I'll tell myself
Solar investors will always live on the highs or lows of the industry, but this week shows just how quickly the stocks can move without any real financial news. If you're looking to get into solar stocks, sit tight and wait for a feed-in tariff cut in Germany or a desert tortoise lawsuit in California. The market will freak out, and you'll have a perfect buying opportunity.

As for Internet stocks, I've given up trying to figure out what they're going to do. All I know is that if I would have started an online discount company five years ago, I'd have my island in the Caribbean by now.

Fool contributor Travis Hoium owns solar stocks but has no position in any company mentioned in this article. 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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  • Report this Comment On June 03, 2011, at 8:24 PM, sailrick wrote:

    I hear what you are saying about knee jerk reactions.

    That cuts both ways though.

    Since these solars are so depressed, with ridiculously low valuations, the jump in share prices, following the news about nuclear in Germany, barely moved their valuations and is anything but wild speculation or any kind of bubble mentality. In fact the situation is the opposite of a bubble.

    It is quite evident that Wall St has been talking down solar stocks, particularly Chinese ones, consistently for the past two years.

    While talking heads have been saying that most countries have no intention of slowing down growth of nuclear, their populaces may have other ideas. I think the ripple effect from Fukishima is only in it's beginning stages.

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