Tuesday, April 26, 2011

Yingli (YGE) (STP) (CSIQ) (PWER) Cheap Because of Artifical 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 Suntech Power Holdings (NYSE:STP), Yingli Green Energy (NYSE:YGE), Power-One Inc (NASDAQ:PWER) and Canadian Solar (NASDAQ:CSIQ), 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.

3 comments:

Marc said...

Fossil fuels receive huge government subsidies. Case in point, the federal government approved 45 Billion in loan guarantees for new nukes. Nobody on wall street would touch nuclear with a 10 foot pole if it wasn't for the loan guarantees. Coal, Oil, Ethanol all receive huge government subsidies. If all the subsidies spent on fossil fuels was shifted to solar, we would make huge strides solving global warming, unemployment, national security.

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Anonymous said...

We would also only be able to run our lights during the day. Solar is and always will be a joke in the context of our energy mix. It is a symbol that makes people feel good about themselves while creating more upstream pollution during the mining, manufacturing, transportation, and construction phases of their life-cycle than they save by "offsetting" fossil fuels. Even if all subsidies were eliminated renewables still wouldn't be on an even playing field with fossil fuels due to the intermittent nature of their feed-stocks.

Anonymous said...

nowadays anyone who is able to activate an electrical switch thinks he is an energy expert, knowing nothing about the entwine of politics and engergy companies, nothing about avoided costs, subsidies and stranded investments.
so most of your statements are BS