A recent report from Credit Suisse showed their thoughts on the solar demand forecast for 2010. They see them up over 12 gigawatts. This appears to be very bullish escpecially since in the past Solar and Oil traded in correlation over the past couple of years, meaning as oil went up Solar went up. This was how we made money when oil was jumping over 100 a barrel.
Despite the oil correlation their is a significant need for green energy and solar is a big part of that. I have been waiting for divergene in price action and we may be seeing that now.
The danger of building large capacity of solar panels and components leads to inventory glut if businesses aren't buying leading to oversupply and lower demand equalling lower prices. Especially if Europe isn't installing and tax-credits are lowered or removed...
If you look at the forecasts from some of the bigger solar firms during their earnings reports and guidance they are discussing high gigawatts as well.
Additonally, guidance of 4GW capacity in the 2nd quarter of 2010 alone has been made. So how do you trade this?
Look at the solar stocks indiviudually, FSLR, YGE, SOLR, MEMC, SPWR etc... or look at two ETFs, TAN and PBW.
I have traded PBW successfully in the past and I like the fact it is below $10. I also like the diversity among solar companies in TAN which provides a lower price risk across the industry.
PBW is more than just solar companies...
Happy Trading...
No comments:
Post a Comment