I check the financial headlines every morning before I leave for the office. The past few days it has been nothing but bad news--on Wednesday it was a Citigroup Inc. (NYSE: C) write-down and yesterday it was Merrill Lynch & Co., Inc. (NYSE: MER).
So this morning when I read that stocks were poised to rebound on GE's reported profits, I knew it couldn't be true.
You see, stocks didn't slide on Wednesday because of Citi. And they didn't plunge yesterday because of Merrill. Stocks are falling for all types of reasons, many of which I'm sure you're familiar with.
But one sector's recent fall, at least in my opinion, can't be attributed to the now stale mortgage mess and related fallout.
Solar Stocks
Solar stocks were arguably 2007's Wall Street darlings. The stories of First Solar, Inc. (NASDAQ: FSLR) and SunPower Corporation (NASDAQ: SPWR) have traveled the world like Californian gold. Those stocks gained roughly 920% and 315% just last year.But for all the glory of those monster gains, there is an associated negative as well.
It's the extreme overvaluation of stocks in the solar sector that has caused, to use the words of Bernanke, this negative downside to growth.
Once investors realized that the sector had gone too high too fast, the profit taking began. And what we're seeing now is a shakeout back to fairly-valued levels.
SunPower has gone from a 52-week high of $164.49 down to around $75. First Solar has dropped from $283 to $175.
Of course, the correction didn't affect the more moderately priced solar stocks quite as drastically. And that means there's an upside to this downturn.
If you're like many investors trying to turn a profit in the booming renewable energy market, solar is probably your first option.
This recent selloff has unearthed some screaming buys, as prices are sure to rebound.
You see, the solar industry, despite the red-soaked tickers of this week, is still strong. Industry consolidation coupled with a nagging silicon shortage and high demand from Europe and Asia will ensure at least some level of stability and growth.
And once the US gets its legislative and tax incentive act together we'll see this industry jump right back to pre-downturn levels. Only this time, the high valuation will be justified.
In fact, Green Chip Stocks has uncovered the perfect solar stock to own during this recent slide. It's a small, relatively unheard-of photovoltaic company. And at the levels where it's currently trading, there is hardly any downside.
To learn more about that company, click here.
Until next time,
Nick
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What the firm does is sell the electricity produced to the utility, and in turn sells it to the owner of the building at a lower rate. The company makes money both ways.
It is obvious the days of fossil and nuclear are numbered. General Motors is now producing alcohol for less than a dollar a gallon, which beats three dollars at the pump!
Also Nanotechnology is marketing solar for less than a dollar a watt: http://www.enn.com/business/article/28057
I see bright days ahead; an end to our dependence on foreign petroleum and cheap energy.