Solar Winners & Losers: GT, Suntech - TheStreet

NEW YORK (

TheStreet

) -- For the second-consecutive day, some of the smaller companies on the solar landscape ended Wednesday's market session as the biggest solar gainers.

Yesterday, the

biggest news of the day came from one of the smallest players, with $70 million market cap company

Hoku Scientific

(SYMBOL)

gaining 21%.

While Wednesday's trading action cut into the

previous gains made by Hoku -- it was down 2.4% on Wednesday with double its average volume of shares traded --

GT Solar

( SOLR) and

Spire Corporation

(SPIR)

again were the tops in solar trading.

GT Solar was up close to 9% and also saw a second consecutive day of high volume -- 1.5 million shares traded on Tuesday versus an average of 754,000.

Spire was up a little over 10% on triple its average volume -- 68,000 shares traded versus 21,000 on a typical day.

Is this just the typical solar momentum that often changes day to day without any compelling reason, if not sometimes for the wrong reasons?

There's a good bet that is exactly what's going on, or possibly, all the recent positive outlook on the sector is filtering down to the equipment makers like GT Solar and Spire.

On Wednesday, for example,

Applied Material's

(AMAT) - Get Report

solar unit presented a bullish outlook on the sector and for its business in 2010. Applied Materials thin film solar business is a completely different process than the crystalline approach used by GT Solar, but possibly the increasingly positive calls on the solar sector are applying generally to GT Solar. Analysts' caution, however, that even with most sentiment on the sector bullish going into 2010, Applied Materials had a very bad year in 2009 with its solar business, and its bullish comments should be placed in the context of its recent underperformance.

GT Solar has been on a wild ride all year, too. GT Solar moved from a January 52-week low back towards its 52-week high in the April-June period, before heading back down more recently to where it stands today, basically in the middle of its 52-week range.

Arguably the biggest news of the day in solar did not benefit the solar firms that were spreading it.

Suntech Power Holdings

(STP)

announced three big agreements for the European market in 2010 and with contracts continuing over a three-year period, but its shares were close to flat, gaining 0.1% on Wednesday. LDK Solar was reportedly

considering a spinoff of its polysilicon plant business , but its shares only gained 0.2%.

Granted, both Suntech and LDK have seen big run-ups of late, and Suntech benefited from

a few ratings upgrades this week. Suntech has added $4 to its share price from mid-November to today, and LDK added $3 to its share price over the same time period, so maybe it's just a matter of the news trailing investors already bullish on the companies.

In the case of Suntech, the market's muted response to its European business announcement could be indicative of the larger concerns about its ability to increase utilization to a level competitive with solar peers, even factoring in the additional European business. Under the terms of the agreements, 115MW is planned to be supplied in 2010, 155MW in 2011 and 220MW in 2012.

Adam Krop, an analyst with Ardour Capital Management, said Monday's 10% spike in Suntech was "baffling," and Ardour still has a hold rating on the company. He noted that Suntech has been plagued by low utilization in 2009 -- in the first half of the year it was between 40%-50% -- and even with a projection of 75%-80% utilization in 2010, it will still trail solar competitors that are at maximum utilization.

"The announcement from Suntech today wasn't significant to us. The capacity added today still has them in line with our projection of 75%-80% utilization on 2010," Krop said.

-- Reported by Eric Rosenbaum in New York.

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