Solar Winners: First Solar, SunPower

NEW YORK ( TheStreet) -- Finally, a day during which U.S-based solar companies are outperforming their Chinese peers. It seems as if it's been a long time since the market shined on U.S. solar companies as it did today.

But was the run-up in First Solar ( FSLR) and SunPower ( SPWRA) justifiable? Maybe about as justifiable as the big run-up in Chinese stocks in the current quarter -- which means that question deserves a big question mark.

And an answer to these questions won't be provided by solar analysts, who are far from in one camp, or even anywhere close to one camp, when it comes to these companies and the way investors trade them day to day.

First Solar was up 5.2% at the market close on close to twice the average daily volume of shares traded -- 5.2 million shares traded today versus 2.8 million on average. SunPower was up more than 4.6% at the close of trading, though its volume was only slightly higher than its average -- 3.5 million versus 3 million.

SunPower is an obvious question mark, as buying the shares of a company currently accused of accounting fraud and facing 30 or so class-action lawsuits is something of a high-risk endeavor. Indeed, when Pacific Crest Securities recently raised its rating on the SunPower, it did so with a disclosure that investors should also buy antacid.

There is some belief on The Street that the 20% hit SunPower shares already took has made the company an opportunistic buy. That's the kind of logic, however, that makes Gordon Johnson, analyst at Hapoalim Securities, apoplectic. "Fifteen bucks would be my target. And how can you even invest in a company that's been accused of accounting fraud?"

Still, investors were doing just that today, driving SunPower up to $22.50 or a gain of $0.98.

In the case of First Solar, it is more complicated tale of the tape than just whether or not investor believe accounting fraud will be massive -- and the lawsuits, also -- or contained. While in a sector as momentum-driven as solar it is hard -- and potentially dangerous -- to read too much into any intraday spike in price or volume, the market's interest today in First Solar could indicate the beginnings of a move by long-term investors back into the company's shares.

Adam Krop, a solar analyst at Ardour Capital Investments, said First Solar had been under significant pricing pressure for some time, as a rebate program it implemented to fight off competition from the Chinese competitors drastically reduced its gross margin levels. It found a nice bottom in the $120 range -- today it rose close to $7 to above $128. The general trend in First Solar stock is now poised for the addition of long-term positions, Krop argued. The stock recently broke through its 50 day trading range, also.

There was also some speculation that as both the U.S.-based solar companies were up on a day when the U.S. unemployment report delivered encouraging news, there could be a bump from that broad U.S. positive indicator. However, given the volatile nature of solar stocks, analysts were hesitant to attribute the rise in the stocks to data as broad as labor market reports.

According to the skeptics, First Solar's rise today was classic solar momentum, no more solid than Icarus' glued wings flapping toward the sun. The first event was that First Solar project partner Phoenix Solar came out today with a release that indicated the fourth quarter project business had been positive. This was news that maybe wasn't news, as it basically reiterated what the company had already stated in the third quarter.

Alone, the Phoenix release would not have moved First Solar higher, but First Solar officials were also speaking at a Credit Suisse conference today. This is where the intraday classic solar momentum comes in, according to Hapoalim's Johnson.

Johnson, self-described as far to the skeptical end of the analyst spectrum, said a research note from Lazard released today said that the stock would move to $130. Also, comments attributed to First Solar management at the Credit Suisse conference indicated that the company believed business would be strong in the first half of the year. The stock shot up $7 today to close at $128.

Johnson was confused, and so he called First Solar. According to Johnson, he had sat in on the Webcast of the First Solar presentation and he didn't hear anything along those lines.

"I talked to First Solar and they said, 'No, we never said the first half would be strong,'" Johnson contends. "The Street is setting people up for another big disappointment," a chagrined Johnson said.

In the final analysis, this confusion has long been part and parcel of the solar investing game. The manufacturers talk, and the interpretations take flight immediately. "It's just the immaturity of the solar industry, again, and the usual loose lips from manufacturers that in the end won't do them any good," said one industry analyst who did not want to be quoted directly when speaking about the comments made by manufacturers like First Solar.

And so goes another day in solar investing.

-- Reported by Eric Rosenbaum in New York.

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