2013 Solar Investing
Buy This Solar Stock Now!
Press releases are not news!
I can't tell you how many times I've had readers quote press releases in an attempt to justify flawed market analysis — from congressional statements typed up by wide-eyed interns to pump pieces meticulously crafted by high-end investor relations firms, investors are plagued with mountains of misinformation and fake news.
And this is why I constantly advise folks to follow up on everything with their own due diligence before making any moves...
Because if you rely solely on press releases to dictate your investment strategies, you can get burned.
To give you an example of what I'm talking about, last week there was a press release entitled, “Solar Industry Impressing Investors with Gains in 2013 after a Dismal 2012.” Not surprisingly, the headline landed this press release in a lot of major news streams.
The piece starts out with: “After struggling through most of 2012, the solar industry has started 2013 on an impressive run. Both the Market Vectors Solar Energy ETF (NYSE: KWT) and the Guggenheim Solar ETF (NYSE: TAN) have gained nearly 20 percent year-to-date.”
That is, in fact, accurate. The truth is most of the major solar players across the board have had a stellar couple of months.
The problem, however, is that a lot of investors will read something like this and assume that perhaps the solar bears have gone back into hibernation as the sector is back on the upswing. And that may not necessarily be the case.
Curb Your Enthusiasm
I have little doubt that 2013 will be a better year for solar compared to 2012...
But hurdles remain. The industry is still plagued with a glut of product that's going to take at least another year to eat through. Margins are still razor thin for most of the cell and module manufacturers. And in the case of China's solar players, without the billions the government continues to plow into its domestic solar manufacturing, those companies are dead in the water.
Of course, I don't expect to see China abandon its solar industry. After all, the Middle Kingdom has too much skin in the game at this point. And certainly with the toxic soup that blankets Beijing nearly every day, China is anxious to put some of that domestic clean energy product on its own rooftops.
But unless you have the ability to move quickly in and out of these stocks, I would caution against getting too bullish, at least in the near term.
Here's the deal on solar: Without a doubt, the solar industry will continue to grow by leaps and bounds in 2013.
The Chinese are installing solar at a record pace; and here in the United States, the availability of inexpensive panels, new solar leasing models like those offered by SolarCity (NASDAQ: SCTY), and new crowd funding opportunities, like those now being offered by an outfit called Mosaic, will likely facilitate record-breaking installations this year.
From the perspective of consumers, it's finally getting to the point where solar does in fact make economic sense over the long term.
But from the perspective of an investor, risk does remain.
The solar manufacturing sector is still very risky. And although some of the major players continue to generate some serious revenue, 2013 will definitely see more bankruptcies and more consolidation.
And one thing I can definitely assure you is the days of 300% and 400% gains from solar manufacturers are over...
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Now, if you're looking to make some real money in the solar space this year — without taking on an extraordinary amount of risk — you have three options:
Installation and Leasing
The third is actually very hard to come by these days for individual investors, as most of this stuff is still in university labs or testing grounds operated by private companies.
However, there is one very lucrative solar-related tech firm that you can actually get a piece of...
You see, in these highly-competitive days of solar, manufacturers are desperate to integrate new technologies that can both cut production costs and increase energy output. And that's exactly what this company offers.
I'm not going to get into the specifics of the technology here.
But what I will tell you is this company's plan is genius. You see, instead of taking on the burden of integrating its technology into its own solar module, management simply licenses the technology to module manufacturers in exchange for a piece of the action. Basically, they take on little risk — but ultimately get to wet their beak on nearly every solar panel slapped up on the world's rooftops. Brilliant!
To a new way of life and a new generation of wealth...
@JeffSiegel on Twitter
Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor''s page.