Who lost the Republican debate? How about solar stocks.
And Michael Ahearn.
No, he is not an eight dwarf from the planet Mars, although if he were he might have won the debate based on the sheer entertainment value of a new (and possibly green) face. He is the CEO of First Solar (FSLR). You can guess what this company does to generate profits (and losses).
I warned earlier this year that his company had a bubblicious stock that could pop on any bad news. The 12 month high on the stock is $175.45. It is now trading around $45. Not very hard to predict – solar stocks with a P/E in the stratosphere and dependent on government subsidies to consumers were not in a good place. And these subsidies are going away in the new era of limited (political doublespeak for broke, busted out of money) government. Limited here. In Greece. In Italy, In Spain – and so on.
The Republican debate confirmed not only are they going away – they are going away big time, with no hope of either the Democrats or the Republicans subsidizing anything related energy other than Big Oil, Big Farmers and other major constituencies in many large, electorally rich states. (See my story on winning stocks from the GOP debate).
There is also a reality here – with natural gas at four bucks an MCF and excess supply for as far as the eye can see, renewable energy is not competitive except in the desert or the White House lawn. I speak from personal experience – as a college senior and part time pseudo-analyst at a consulting firm in Washington, I worked on President Carter’s National Energy Plan and worked in solar energy stuff for five years.
Same problems – too expensive and when competing fuels got more expensive, more came out of the ground. That was thirty five years ago and the issues have not changed. Large scale deployment of renewable energy in the US requires government subsidies. Permanent government subsidies. And these are not going to happen.
The Republicans ducked every single question on almost every single issue – the Democrats would have done the same – but they did you give you some great advice, indirectly.
Avoid – no – run from solar stocks that appear “beaten down” – and if you can handle the risk, short them with puts. FSLR is one name to watch; Suntech (STP) is another – I shorted those guys when the stock was somewhere near double digits, it is now two and a half bucks.
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