Solar State: Look to Supply Lines

There is almost a daily a stream of conflicting data points coming out of the solar industry. One way to reconcile such differences is to look at the supply line.

Dozens of companies sell materials to the solar industry for module construction, assembly and installation, including polysilicon, indium tin oxide (transparent conductive electrode), adhesives, sealants, encapsulants, coatings, sputtering targets and gases. A healthy supply chain means a healthy solar panel market.

I noted in my Sept. 1 article on TheStreet.com that solar panel manufacturers that reported losses a few weeks earlier included Energy Conversion Devices(ENER Quote), JA Solar(JASO Quote), LDK Solar(LDK Quote), ReneSola(SOL Quote), Solar Power(SOPW Quote) and Yingli Green Energy(YGE Quote).

On Oct. 19, Macquarie upgraded YGE to outperform and raised the price target to $15 from $12. Piper Jaffray reiterated an overweight rating and $6 price target on JASO.

On Oct. 1, Barclays Capital maintained an equal weight rating and $4.50 price target on SOL, and Societe Generale downgraded LDK from hold to sell, reducing the price target from $8.50 to $4.50.

Also of importance, on Sept. 8, ENER rose 24.98% to $13.01 on speculation that Applied Materials(AMAT Quote) would acquire ENER for $18 per share. Recently, SunPower(SPWRA Quote) and Akeena Solar(AKNS Quote) disappointed investors on Oct. 22, even though it topped Wall Street estimates.

I discussed on Sept. 18 on TheStreet.com that a company I started, SolarPA, has developed an antireflective coating (ARC) utilizing 3-7 nm proprietary nanomaterials to increase the efficiency of solar cells by as much as 12%. A number of material and equipment companies approached me to discuss the technology and possible joint marketing.