Solar Stock Investing: A Long Term Investment In
The Future Of Energy…
The Dynamic Wealth Report
August 18, 2011
by Justin Bennett, Editor
Solar is enduring a long bout of stormy skies…
Industry uncertainty has many sun-collecting stocks trading at 52-week
lows.
And after a wildly disappointing first half 2011, solar investors are
probably wondering if the clouds will ever clear.
What’s giving solar stocks a third degree sunburn?
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Demand for photovoltaic panels (PV) is weakening in Europe as
governments ease up on once strong solar subsidies. And that’s hurting
the entire industry since Europe holds the lion’s share of the world’s
solar demand.
This European slowdown is creating an industry wide solar module supply
glut.
And that means prices have to come down…
While falling solar module prices are good in the long run, it’s putting
pressure on manufacturers’ margins in the short run. And that has
investors steering clear of solar stocks.
The drop in this once sunny sector is rather steep…
Chinese solar cell manufacturers are getting hit especially hard. Companies like Yingli Green Energy Holdings (YGE),
ReneSola (SOL), and
LDK Solar (LDK) are all down significantly… anywhere from 30% to 60%
year to date.
But the recent solar slump presents a promising long term buying
opportunity.
Why?
A fundamental shift is occurring in the global solar industry. And it’s
very likely this change will push solar stocks back into the light.
What’s going on?
A new solar boom is kicking off as we speak…
The weakening European market will quickly be forgotten as China, Japan,
South Korea, Australia, and India go all in on solar. New incentive
programs in these countries should spur demand and quickly whittle away
the global solar supply glut.
Case in point…
China has severe pollution problems stemming from years of excessive
coal burning. Not only that, the emerging economy still has problems
with ‘brown outs’ due to inadequate power supply.
To help solve these problems, China is aiming to install 10GW of solar
capacity by 2015… and 50GW by 2020.
To hit the 2015 goal, China will have to install 9GW of solar capacity
over the next four years. That’s a huge undertaking and will take
enormous quantities of solar modules to make it happen.
Japan is in the same boat…
After the devastating earthquake and ongoing nuclear disaster, Japan is
reworking its energy policy. And solar will be a big beneficiary of the
country’s new push towards safe renewable energy.
According to solarbuzz.com, Japan is installing an estimated 1.29-GW of
solar capacity in 2011, a 35% increase over 2010’s numbers.
No doubt about it, we’re at the start of a huge new energy trend…
Asia is well on its way to becoming the biggest solar growth market in
the world. Currently, Asia makes up a mere 12% of global solar demand. But Japan and other Asian countries are forecasted to make up
26% of
global solar demand by 2015.
Who will benefit from Asia’s solar boom?
The Chinese manufacturers I named earlier are positioned perfectly to
profit from this trend. And it just so happens, they’re trading at
insanely cheap valuations due to the recent solar rout.
Here’s the bottom line…
This year’s solar industry worries are merely growing pains in a very
promising long-term energy sector. As world population swells and energy
demand grows, solar will be an increasingly important part of the global
solution to our energy needs.
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