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

Solar Stocks That May Not Survive to 2014

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

Get Adobe Flash player

Daqo New Energy (DQ - Get Report)
Daqo New Energy shares are up 58% this year.

Simko has a different view of the Chinese polysilicon producer. "This is another company in big trouble," the analyst said.

The problem for Daqo is, like the panel makers that are struggling, about cost structure. However, in the case of Daqo it is about the market price for polysilicon versus its production price.

Polysilicon prices -- which once upon a time were as high as $300 per kilogram -- recently stabilized at around the $30 range thanks to the German demand pickup. Polysilicon prices were below $30 per kilogram just a month ago.

Daqo New Energy can't do enough to reduce its cost structure.

As Collins Stewart analyst Dan Ries recently wrote, "While Daqo is expanding and retrofitting its polysilicon product facilities to reduce costs...the polysilicon industry is facing a multi-year period of excess capacity. DQ's attempt to reduce its dependence on polysilicon with expansion into wafers and modules seems unlikey to payoff, as those business are extremely challenging even for vendors with brand and scale. If all goes well (production cost reduce to $21/kg from $29-30/kg today), DQ may return to profitability in CY13, but even then, earnings would be minor and its debt load high. We see little value in DQ's equity."

Daqo had cash of $60 million and debt of $269 million as of its last quarterly report in November.

Simko said it's hard to see how the Daqo story pans outs.

"To me, it's one more solar company where we don't know what happens, and it's better to stick with bigger companies with better financial statements."

Overall, Simko's outlook is to proceed with caution. "Solar could become like wind turbine manufacturers. Everyone uses the same technology and wind turbine margins disappear. When supply and demand is out of whack, it's a brutal business and there are very few companies left at the end of the day," he said.

>>To see these stocks in action, visit the Solar Stocks That May Not Survive to 2014 portfolio on Stockpickr.

-- Written by Eric Rosenbaum from New York.


>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.
7 of 7

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
STP $0.53 0.00%
DQ $26.92 3.70%
FSLR $57.00 -8.10%
SPWR $21.01 -4.90%
AAPL $95.03 -2.90%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs