Tuesday, April 26, 2011

Hanwha (HSOL) (SOL) (SOLR) (FSLR) Cheap Because of Artificial Markets

Until solar can prove it can stand on its own in the free market, the share prices of the companies will continue to be cheap, as is the case with Hanwha SolarOne (NASDAQ:HSOL), Renesola Ltd. (NYSE:SOL), GT Solar International (NASDAQ:SOLR) and First Solar (Nasdaq:FSLR), which closed mixed Monday.

The major problem with solar is everyone knows it isn't determined by consumer demand, but on government interference and strategies; something that never ends well.

Another major challenge for solar are the assumptions somehow it's going to solve its problems by some type of future invention. People that say this (and they're many) are just true believers and almost religiously want solar to work with a fervor that only the faithful can match.

That's why when you hear those proponents of solar talk about it, it's predicated largely on wishful thinking and faith in some unforeseeable future, rather than the supply and demand of the marketplace.

Solar would become more attractive if it was cut from the governments around the world and allowed to compete against other energy sources. Then they can prove if they are contenders or pretenders. At this time, most investors believe they're pretenders, as evidenced by their weak performances and share prices.

Solar companies will continue to trading at earnings multiples that reflect companies that are in decline until that becomes the reality.

With that unlikely to happen, and some governments like Germany and Italy backing off some of their commitments, it's doubtful the extremely expensive and unreliable energy source, along with solar companies, will be viable any time soon, if ever.

4 comments:

Anonymous said...

I think the "leave it to the market forces" is fair, but solar can become competitive even without further innovation (which should inevitably come) in a not-very-far-fetched scenario of global nuclear power restrictions and $200/barrel oil. And the same rationale goes for wind.

Anonymous said...

All, of the vast majority of energy (except nuclear and geothermal energy) comes from the sun. I think that it will remain for about 50 years. Therefore, in my view will continue to develop energy production by PV panels. In this regard, the sun has not told the last word.! :-)

Anonymous said...

It sounds good taking away subsidies. Does this mean we also take away the subsidies for oil, gas, coal, and nuclear? They all have subsidies. If you want a level playing field then take all the subsidies away. Everyone singles out solar as having subsidies. The only way to have a valuation of these sources of energy is to remove all the subsidies. Then we can make a comparison.

Anonymous said...

Agree with the comments on regulation, but disagree with your comment about reliability. I have not heard of solar installations that started catastrophic meltdowns threatening global wide contamination, nor has the sun has burned out to the best of my knowledge. To me the comment reveals a bias that is beyond the facts of the data. Have you been burned by by solar stock volatility?