SunPower Is a Strong Buy, Poll Says - TheStreet

NEW YORK (

TheStreet

) -- It may seem counterintuitive that

SunPower

(SPWRA)

, which is currently investigating internal accounting errors -- and is being accused by some of accounting fraud -- is also viewed by the market as a strong buy.

But a fact is a fact -- or at least a poll result is a poll result -- and that, indeed, is what our poll says.

When TheStreet asked it readers last week,

Do you think SunPower's recent accounting issues are much ado about nothing, or is the worst light yet to shine on SunPower in this crisis?

the message we received back was: buy, buy, buy; here comes the sun on a big price spike.

Did some time traveler turn back the capital markets clock, and erase from the history books the existence of

Enron

,

WorldCom

and

Tyco

's Dennis Kozlowski and his million-dollar ice sculptures aboard yachts spewing vodka from their private parts? Have the memories of accounting scandals that got worse before they got -- well, before they ended in corporate catastrophes -- become distant and immaterial to investors?

To be fair to SunPower, we are nowhere near that stage yet. The only facts known are that the SunPower launched an internal investigation into accounting irregularities, and may have to restate earnings, most notably from the second quarter of this year. SunPower expects to announce in a conference call by the end of this week the results of its investigation.

In the lead-up to the SunPower conference call, the market has been of two minds about the size and scope of the accounting issues. In the day immediately after SunPower announced the internal investigation, SunPower shares dropped 20% in one day.

Investors appeared to fear the worst from the moment SunPower mentioned the words accounting and investigation in the same sentence. However, the negative sentiment has not lasted.

SunPower shares have climbed back up considerably since its 52-week low of $19.70 reached on Nov. 20, to a close of $22.76 last Friday -- and it should be noted that price was reached after a week during which the general trend in solar stocks was down. SunPower shares had climbed back as high as $24 before last week began.

Last week,

SunPower even received several ratings upgrades from the Street. Many investors, in fact, continue to express the view that the whack SunPower took has made it a value bet. Pacific Crest Securities went so far as to

encourage investors to buy SunPower ... and antacid.

On the flip side are analysts like Gordon Johnson of Hapoalim Securities, who is licking his lips waiting for the

SunPower accounting fraud to be confirmed, like a solar sector version of Robert Shiller awaiting his call about the housing bubble to come true.

If Johnson's predictions turn out to be correct, they will be at odds with just about every survey respondent:

Approximately 46% of survey respondents said SunPower is a strong buy and that the market has really overreacted to the accounting issues.

The investment belief that SunPower should be overweighted, even if it is not a strong buy, garnered 18% of the votes, right behind the prudent market watchers.

It seems that when it comes to SunPower the bulls -- almost two-thirds of our survey respondents -- are planning to gore Gordon Johnson and the doomsday bean counters.

There was, it should be noted, a significant level of prudent sentiment: 19% of survey respondents said they were neutral on SunPower until the management conference call this week.

Meanwhile, a mere 7% of survey respondents said to underweight SunPower, while only 8% of survey takers said to "unload the stock: SunPower will be tied up in courts for years to come."

One thing is for sure: the SunPower conference call expected on Dec. 16 should be a well-attended event. And we should know soon enough whether Gordon Johnson, or the investors who have placed their risk-taking bets on SunPower, are the ones with the words, "I told you so," on their lips and ready to gloat.

-- Reported by Eric Rosenbaum in New York.

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