Shares of a whole range of alternative energy stocks -- fuel cell manufacturer Plug Power (PLUG -3.83%), solar panel installer SunPower Corporation (SPWR 0.63%), and ethanol brewer Pacific Ethanol (ALTO -0.91%) -- are all rocketing higher in afternoon trading on the Nasdaq today. Although each is somewhat off its respective high, as of 2:30 p.m. EDT, Plug shares are still up a respectable 7%, SunPower retains a 10.6% gain, and Pacific Ethanol remains 9.5% above yesterday's close.
Curiously, there doesn't seem to be any news behind any of these rallies... except perhaps one.
Specifically, SunPower -- or more specifically, Sunpower. Yesterday it was announced that a company called "Sunpower Group Ltd" had secured an $8.8 million repeat manufacturing and services contract to provide China Huanqiu Contracting & Engineering with "a complete demountable flare system that will be part of the world's largest coal-to-glycol project under construction."
Now, "coal to glycol" may sound like a strange kind of a contract for solar company SunPower Corporation to get involved in. Could it be that SunPower is branching out and expanding its business into new forms of alternative energy in China?
Hardly. In fact, it seems Nanjing, China-based Sunpower Group has nothing whatsoever to do with San Jose, California-based SunPower Corporation. Investors who are bidding up SunPower stock on news of the contract today may be making a grievous error if they think it does.
As for the rising share prices of Plug and Pacific Ethanol, there appears to be no news to support either stock's move. No analyst upgrades, no price target hikes -- and certainly no coal-to-glycol deals on the Chinese mainland.
Still, that's not surprising in a market like this one, where historically profitless stocks make large percentage moves on pretty much a daily basis. Sometimes, stocks make moves -- even big moves -- simply because they're moving (and because other investors see them moving, and glom onto the momentum trade, enticing other investors to follow, and on ad infinitum).
It doesn't mean there's a reason they're moving. And it doesn't mean you have to join in.