Oil is now in its supercycle going to rise to over 100 dollars a barrel in the months to come. Im not the only one seeing this, but I am seeing the price action in the solars becoming hot once more. I saw this one stock, CSUN, in which it made a rounded double bottom and is now returning to the IPO high of 17 dollars. My price target on CSUN is 23 dollars at this point.
SOLF scares me. The last earnings call was not just bad, but real bad. Im not sure where it will go. While everyone else was beating estimates, SOLF turned in a really bad quarter. SOLF could go up from here and maybe it just might get to 18, but its conference calls like the last one which have me shaking my head to both sides. I cant trust that management and so I cant touch the stock with the ten foot pole. The problems they have have nothing to do with the fundamentals of the solar industry. Their problems revolve around the management of the company. I feel JASO has a chance of breaking out into the 30s, LDK has a chance of going to the 30s, CSIQ to the low teens, TSL might move lower to the mid-30s, FSLR will move to the low 80s, and thats all I looked at. I didnt look at STP and ESLR and the others. There is definate momentum and I feel CSUN might be the most bullish, although very speculative, play. If longing one of these solars, I would long a few others too as a hedge.
The PBW is an ETF filled with alternative energy plays. Its top holdings are the following: SunPower Corporation 4.05% Echelon Corporation 3.81% Cypress Semiconductor Corporation 3.64% Cree, Inc. 3.63% First Solar, Inc. 3.25% OM Group, Inc. 3.23% Universal Display Corporation 3.15% Kyocera Corp. (ADR) 3.10% Suntech Power Holdings Co., Ltd. ADR 3.08% Applied Materials 3.07% Look at the relationship of oil to this ETF.
I would have to disagree with you on this. The only thing that would cause oil to do this in the next 1-2 years is a major interruption of supply (terrorism). Why you ask? Age old commodity saying, "high prices cure high prices". Example: $68.55 is current August 2007 NYMEX oil. $2.2425 is current August 2007 NYMEX RBOB (gasoline). This equates to a $25.63 gasoline crack. If we kept the current crack, (its been in the mid to upper $30.'s in recent weeks which would create a higher price), $100 crude would equate to $3.00 RBOB. If all scales were kept the same, (they historically have blown out), that would be a jump of another 33% minimum. A nationwide pump price of $4.00+ would be the final dagger in this debt ridden market IMO.
BTW, I do like solar and wind. Bio fuels are the worst thing that this world could ever do, and they are a major mistake.
The rise in the price of gas is because of a lack of refineries. No new refineries will be built in the future and operations will be scaled back mainly because of Ethanol and other alternative energy legislation. Those companies that operate refineries will not invest new money into them if Bush is going to reduce the consumption of gasoline into the country. Therefore, 4-5 dollar per gallon gasoline is a certainty. The new floor on oil will now be $68 with a rise to over $100 a certainty. The reason will not be terrorism or an interuption, but because of supply and demand. The worldwide rig count is only up 4.5% from last year. This year demand is much higher, but the world only works with 4.5% more rigs then last year to produce oil.