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Solar Stocks for 2011

Jeff Siegel

Written By Jeff Siegel

Posted December 13, 2010

Last week, Howard Stern announced he had re-signed to Sirius XM Radio (NASDAQ: SIRI).

For Howard Stern fans, it was a great day. And I’m sure Howard was more than happy, as this deal will not only allow him to help all those folks who rely on the show for their livelihoods, but also make him a ton of cash.

Of course, earlier in the week, Sirius CFO David Frear suggested that Howard may have to take a pay cut. And when the Stern show staff asked some folks on the street about a potential pay cut, most actually agreed that Howard’s new contract should be worth less than his original $500 million deal…

So let’s see… Howard signed on to Sirius when the struggling company was getting its ass handed to it by rival XM. The satellite radio company had only 600,000 subscribers, and folks were not beating down the door to sign up for subscriptions.

Five years after Howard Stern signed on with Sirius, Sirius merged with XM, and now the company boasts 20 million subscribers. I would also argue that Howard and Sirius helped put a very real nail in the terrestrial radio coffin.

Howard did what he was hired to do. And make no mistake; it was Howard’s influence and massive fan base that kept Sirius from going gently into that good night.

So why would anyone suggest that he should take a pay cut? If anything, he deserves a raise!

I thought about this for awhile, and came to the conclusion that because we’re in such shaky economic times, most folks simply want the wealthy to take a bigger hit.

Certainly we can see proof of that now with expiring Bush tax cuts. There are plenty of polls suggesting most Americans think it’s only fair to have the wealthy pay more than everyone else.

The reality is this: The way our system is set up, no one’s getting a fair shake — not the rich, not the middle class, and not the poor.

But that doesn’t stop the jokers in Washington from creating the illusion that they’re working in the best interests of tax payers…

If they were really working in the best interests of taxpayers, they would completely overhaul the tax code to make it fair for all Americans.

And on top of that, they would stop deciding which taxpayer-supported programs live and die by the number of lobbyists that come knocking on their doors.

Did someone say jobs?

For years, I have watched the renewable energy industry essentially beg for breadcrumbs while established, mature industries — like oil and coal — strolled through the halls of Congress with wheelbarrows of taxpayer dollars.

This year, the Treasury Grant program for renewables is set to expire on December 31. But in an effort to reach a compromise, a one-year extension of that program was introduced in the Senate last Thursday.

According to the Lawrence Berkeley National Laboratory, this program has supported more than 55,000 jobs. The program has also supported 1,179 solar projects in 42 states, and 211 wind projects in 38 states.

The purpose of the program was to stimulate financing and installation of renewable energy projects. It succeeded. In fact the program leveraged $5.4 billion in federal funds to attract more than $12.7 billion of outside investment.

And according to a report co-authored by Deutsche Bank, a one-year extension of these grants would create more than 100,000 new jobs.

Solar stocks to watch

With the one-year extension of the treasury grants, solar advocates are breathing a short sigh of relief.

As well, I spent about an hour this morning sifting through new analyst reports that are now including the impact of the treasury grant extension. After all, even the most bullish solar analysts were shrugging their shoulders at the possibility of the solar industry getting cut off.

And we’ve had to make some adjustments as well. To be honest, we weren’t too bullish on the treasury grants being extended. But overall, little has changed in regards to our solar outlook for 2011.

China solar manufacturers will remain the dominant force, and a handful of China solar stocks will continue to be the strongest contenders — including, but not limited to:

  • Trina Solar (NASDAQ: TSL)
  • JA Solar (NASDAQ: JASO)
  • Yingli (NYSE: YGE)
  • Solarfun (NASDAQ: SOLF)

Another one we’ll be keeping an eye on in 2011 is Daqo New Energy (NYSE: DQ).

Last week, Wells Fargo initiated coverage on this China polysilicon manufacturer, setting an “outperform” rating and a $16 price target. And Auriga has called the company highly profitable and undervalued, placing a Buy rating on the stock with a $20 price target.

Daqo went public just a couple of months ago, but there are a lot of rumblings on the street right now about how this thing is undervalued. The stock is currently trading around $11.00 a share.

In the United States, First Solar (NASDAQ: FSLR) and SunPower (NASDAQ: SPWRA) will get aggressive on the utility-scale side of things.

In fact SunPower announced last week it signed a contract with Iberdrola Renewables (MCR:IBR) (PK:IBDRY) to build a 20 megawatt solar PV plant in Pinal County, Arizona. That plant is expected to be operational in 2011, and will create about 200 jobs.

This news comes just one month after SunPower announced a deal to design and build a 30 megawatt solar plant for Iberdrola in Alamosa County, Colorado.

We expect to see more of these deals in 2011, partly due to the extension of the treasury grant program.

Of course now the question is, When does it stop?

When do we reach a point where we say enough with the taxpayer support. After all, we can’t keep extending these programs forever…

So I propose the following to our brilliant leaders in Washington: Officially end all taxpayer support of renewable energy on the same date we end all taxpayer support of fossil fuels.

Seems reasonable.

To a new way of life, and a new generation of wealth…

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