This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

8 Bold Questions for Solar Stocks in 2012

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

7. Who is left standing in China?
Bloomberg recently wrote a piece on Apple (AAPL) contract manufacturer FoxConn's plans to enter the solar marketplace as a manufacturer of panels. As the efficiency of Asian-made panels has increased and the cost of manufacturing in Asia has plummeted, one has to wonder whether pure-play solar companies like Trina Solar (TSL) or Suntech Power or Yingli Green Energy (YGE) are the future of that industry, or if a low-cost commoditized product like the solar module should be work left to the contract manufacturers of the world. It's probably fair to say that manufacturing an iPad or iPhone requires more precision than a solar module.

In a sense, it's interesting to note that Foxconn is getting into the solar manufacturing game now, after gross margins have plummeted from the 30% range to less than 10%, and even into negative territory for some companies right now. This is the world which Foxconn knows, a low margin game that it does better than anyone else, not a high margin unsustainable game played by companies running from European market to European market chasing short-term solar subsidies. So will the Chinese, and possibly the global solar manufacturing space, look very different five years from now, with the pure-play a thing of the past and the Foxconns of the world adding the solar panel to the list of "innovative" products that they churn out for the world?

This also circles back around to the earlier question on the future of U.S. solar manufacturing. With First Solar interim CEO Ahearn scaling back manufacturing expansion and talking a more sober game of developing solar projects in key emerging markets like China, India and Africa, should these U.S. solar innovators become the "Bechtels" of solar, setting the standard in global construction of alternative energy infrastructure and leaving the panel manufacturing to Foxconn?

8. Does the escalating solar trade war eat the hand that feeds solar?
If you think back over the past few years for this sector all of the market moving headlines -- before the crash of 2011 -- had been about the risk to European subsidies. Would Germany install a cap on solar installations? Would Italy curtail the level of subsidies paid for solar projects? Nothing moved the solar market like some anonymous comment from a European politician about potential changes to solar subsidies.

Those days may be over, but the political game in solar is just getting started with the trade war launched by SolarWorld against Chinese solar manufacturers, alleging dumping of solar modules and unfair subsidies. Two can play at that game. In fact, more than two can play. China is planning to launch its own counter-offensive against U.S. solar subsidies -- and we have plenty of them -- and India is now making noise about getting into the solar trade war, a market when First Solar has benefited greatly from the financing largess of the U.S. bank focused on export, the Ex-Im Bank. The U.S. steel industry launched a trade war in the 1970s. It's still fighting that war today.

My bet is that the solar trade war becomes the most difficult issue to navigate for solar investors, much like trying to handicap the next move by Italy or Germany relative to solar subsidies once was. We may soon wish for the return of those easy-to-understand solar subsidy war days.


>To contact the writer of this article, click here: Eric Rosenbaum.

>To follow the writer on Twitter, go to Eric Rosenbaum.

Follow TheStreet on Twitter and become a fan on Facebook.
5 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
LDK $0.00 0.00%
STP $0.53 0.00%
FSLR $56.40 0.41%
AAPL $118.03 -0.71%
FB $105.41 -0.31%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs