At Long Last, Solar Sector Offers Value

Updated with closing stock prices

Value is always the key to finding good investments. For an old oil guy like me, the solar stocks have never represented good value and I have never recommended them. But now, the tide may be changing.

Solar stocks have been "darling" investments. They represent the promise of new technology that most people feel will be an inevitable part of our energy future. They are "green" stocks and inspire good feelings in those who own them, as if the very act of investment somehow helps the environment. And with oil continuing to see very high prices, the rush into alternative energy companies has seemed liked the "smart" investment to make. For all these reasons, solar stocks have always seemed to me to be overvalued, running far ahead of what the companies actually could deliver in growth and earnings.

Let's look at First Solar ( FSLR), which is far and away the solar company with the largest market-cap and which has always been the benchmark for measuring the sector.

FSLR Weekly (NYSE) -- First Solar Inc
FSLR Weekly Chart
Source: TradeStation

For the crystal ball readers who bet on First Solar as the big winner and lone survivor of the super-hot solar IPO deluge of 2006, collect all the marbles and kewpie dolls -- you've seen FSLR go from a $20 dollar stock to trade for more than $300 in 2008. For the rest of us who missed this 15-bagger, First Solar has continued to disappoint as an investment for the last year and a half. It's been unable to deliver on the promise of solar panels on every house that would have legitimized the overhyped multiples it carried.

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