Solar Stocks Go Nuts On Supply Agreements; Is The Sector Overheated? Posted by Eric Savitz Something truly odd is happening with the solar stocks. The sector went slightly nuts today, as one company after another announced new supply agreements or other related announcements. Here are the basics of the announcements, with links to the full texts; I�ll get to the stock activity in a second.
First Solar (FSLR): Announced five deals to make solar modules totaling 685 megawatts by the end of 2012; the company says the deals can bring is as much as $1.28 billion over the length of the contracts. The contracts are with a bunch of companies that you likely haven�t heard much about. JA Solar (JASO): Announced that it has commenced production on four additional solar cell production lines. The company said they are ahead of schedule. The four new lines increase its manufacturing capacity to 175 MW a year from 75 MW. Trina Solar (TSL): Said it signed four contracts to supply 99 MW of worth of photvoltaic modules to customers in Italy and Germany. Yingli Green Energy (YGE): A week ago, the company announced a deal to supply 9.55 MW of PC modules to a Spanish customer. Hoku Scientific (HOKU): On June 20, the little Hawaiian company�s shares went skyward after it announced a polysilicon supply deal valued at $185 milion over seven years. OK, so check out today�s solar stock madness:
First Solar today rose $23.05, or 24%, to $119.34. JA Solar gained $5.51, or 15%, to $42.76. Trina Solar rose $9.29, or 16%, to $67.37. Yngli Green Energy advanced $2.46, or 16%, to $17.96. Hoku jumped $1.52, or 14%, to $12.65. Solarfun (SOLF) improved $1.28, or 11%, to $12.53. Suntech (STP) gained $1.57, or 4%, to $39.56. LDK Solar (LDK) gained $2.84, or 8%, to $36.37. To be clear: those are the gains today alone, not this month or this year.
Are those gains justified? I have no idea. But if every a sector looked frothy, this is it.
Whatever the cause, certain major manufacturers have been hardly noticed. The second largest solar production volumes last year were attained by Q-Cells, a German company that began with four employees in 2003 and now outranks everyone else in the country. Here's an industry overview: