FSLR, SPWR, DSTI: Solar Stocks Heading Up Despite Bankruptcies

Jul 4, 2012 7:03:11 AM PDT | 1205 View(s) | No Comment(s) - Post a Comment Rating

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StockHQ:

FSLR
$51.55 -$0.03 -0.05%
SPWR
$19.63 +$0.51 +2.67%
DSTI
$0.88 +$0.17 +23.94%

Solar stocks such as First Solar Inc (NASDAQ: FSLR), SunPower Corporation (NASDAQ: SPWR), and DayStar Technologies Inc (NASDAQ: DSTI) seem to have made an intermediate bottom and have started moving up now. What is interesting is that the outlook for solar panel manufacturers has not changed materially and this was amply reflected in the recent bankruptcy protection filing by Abound Solar. The up move in all these three stocks in the last week, despite continued bankruptcy filings, indicates the rock bottom valuations and possibly better times ahead.

Despite having received $70 million in aid from the Department of Energy, Abound failed and joined several other defunct photovoltaic makers in blaming low cost Chinese imports as the main reason behind its failure. It is not surprising as Abound abruptly announced in February that it was ceasing production of its first-generation panel so that it could retool its Colorado factory to produce a more efficient next generation product.

First Solar Inc (NASDAQ: FSLR) has remained unfazed amid the bankruptcies. First Solyndra, then Beacon Power and Ener1 and the list just got one more entry. But FSLR has gained nearly one third in value in the last month alone. Its 52 week range of $ 11.43 - $134.21 alone is enough to explain the kind of ups and downs the company has seen in the recent past. In light of this, current market price of $15.7 looks a bargain, especially when the stock is going at a 58 per cent discount to its fair value.

FSLR is probably the strongest of the pack and thus does not reflect the entire solar pack but other players are also gaining. SunPower Corporation (NASDAQ: SPWR), for example, is up nearly 12 per cent over the last 30 days. Similarly, California based DayStar Technologies Inc (NASDAQ: DSTI) has moved up 57 per cent in the same period. These are exceptional gains but the stocks are still going below their book values.

In isolation book value means nothing but with every photovoltaic manufacturer that goes bankrupt, the remaining ones benefit as they emerge stronger. Still, the remaining ones are not that strong to buy out the ailing ones. It was clear as Abound said it went shopping but could not find a buyer. However, it appears that solar stocks will extend these gains for some time.