Jim Cramer downgrades Solar - Solar stocks feel the Cramer effect
Solar stocks felt the heat today as Jim Cramer went bearish on Solar stocks.
Here’s what he had to say (via Seeking Alpha):
Moving on, Cramer would say goodbye to sun power stocks, because, like the dot.com craze in the 90s, “I think you are going to get a textbook case of oversupply.” Cramer would sell every solar stock including SPWR, ESLR, TSL and even his favorite FSLR. The only company with a solar connection Cramer likes is CY, a semiconductor company which is aggressively buying back shares and owns “the lion’s share” of Sunpower. He feels the company could be split in two and urges investors to “buy CY before it buys itself.”
Here’s the action in Solar stocks today:
Chinese Solar stocks felt additional heat as China’s central bank said it’s widening the trading band of the yuan, hiking interest rates and increasing banks’ reserve requirements, in a move to cool its surging stock market.
I am not sure what Jim Cramer is basing his assessment on but it seems like Solar Stocks do need some time off to cool off. Of course, I do have a bias here as I am short First Solar (Nasdaq: FSLR) and sold Suntech Power (NYSE: STP) a few weeks ago. I am also short MEMC Electronics (NYSE: WFR).
It would be interesting to see how Solar stocks react next week because long term downtrend might provide a buying opportunity.
May 22nd, 2007 at 7:39 pm
I have to disagree with you on MEMC Electronics Materials (WFR). The fundamentals are very strong. All measures of value listed in Yahoo Finance show that this stock is way undervalued probably for the next year. I am well aware of what happens when everyone else jumps into a good thing - I am referring to the price history of Sandisk here. Nevertheless, they have $3.20 earnings virtually locked up for this year and they should make the $3.90 forecast for next year. I have read your concerns about future silicon oversupply and am wary myself. My plan is to stay long on WFR until the first hint of silicon oversupply and then shift my portfolio weighting to solar producers who will benefit from falling silicon prices. The benefit to the solar producers will snowball and the solar boom will really take off at that time.
May 22nd, 2007 at 7:48 pm
Actually, I don’t feel very good about my WFR short. I actually own put options on it. I am actually down right now but I am planning to buy some calls in the very near future and leave those puts as a hedge. However, I would only buy WFR in the mid to high 50’s. (It’s there right now).
The problem is that its not a sexy stock like solar cell manufacturers and doesn’t get the respect and people don’t know how to value it since there are no peers (poly suppliers) in the US market.
I am just worried about Chinese expanding the poly production at a large scale to feed their growing solar industry. It’s just a matter of when not if with the Chinese.