I find it funny that we think almost exactly alike on TSLA but have opposite views on solar; that is the great thing about the stock market, it keeps score to see who was right. Where you see weakness, I see strength and vice versa:
1. You say "lack of market focus", I say "diverse strategy that allows flexibility to take advantage of market economics." As you heard on the SPWR CC, when CEO was asked why residential leases went down QoQ, he said because they chose to go elsewhere with their panels. They are able to decide what market gives them the best economics and quickly shift focus to take advantage of short-term market conditions. They can go from country to country, or they can go from residential to commercial to utility scale. Look at Renesola: they had 13% of sales from the US in Q2 and are projecting 33% from US in Q3, that is how quickly they were able to shift to take advantage of higher ASP's in the US.
2. Growth for SCTY is already priced in. They are going to deploy under 300MW's this year and 450 next year, but they have a higher market cap than SPWR of 4.5b (plus whatever dilution the recent secondary will bring). Jinko Solar has a market cap that is 8x smaller, yet will deploy 3x as much MW's. Same goes for all other Chinese solars.
You also tend to ignore the big risks for SCTY, such:
-Net metering going away
-30% federal tax credit going away beginning 2016
-Their need to borrow $billions to finance their operations if not tens of $billions per year as they grow.
-Panel shortage coming up in 2014, which will lead to higher ASP's. SCTY will either have to pay more or buy from less reputable sources.
-How long will these Chinese panels really last? SCTY is banking that they will last more than 20 years, but it is unproven technology that has only been out a few years. If all of these panels start to fall apart after 10 years then the company will go bankrupt. They are putting a lot of faith into Chinese manufacturing. SPWR panels on the other hand are of highest quality and will last the longest with least amount of degradation.
-Companies are coming out with $0 down solar purchases instead of leases. Why somebody would want to lease a system is beyond my comprehension. Not only do you give all of the financial benefit to SCTY, but it also becomes a huge liability when you sell your house.
I have read an article just the other day that says that the Chinese manufacturers are deciding not to send panels to the US in current Q4, because there is so much demand for solar in China that they are shipping everything locally. Projects have to be completed by year end to take advantage of FIT. Chinese demand will be high enough in 2014 to soak up 50% of tier 1 panel supply. What if China decides to install more PV? There will be nothing left for SCTY.
And last of all, I still can't get around SCTY's valuation. It is already pricing in 2017 or 2020 installations, but there is no certainty that the company will be able to grow that fast. It is kind of like TSLA, but with TSLA there is much less uncertainty.
I just don't see SCTY as a great risk/reward play. There is a good chance that you will turn out to be right on SCTY, but there is just way too much risk in my opinion. There are many smart people that think SCTY's business model will not thrive in 5 years. I know that SPWR is a lot lower risk and still has potential for great return. In my opinion SPWR is the best risk/reward play in the solar sector. The Chinese stocks are good if you want to make a quick buck, but don't mind losing 30% in a few days every now and then. SCTY, might just turn out to be a $20bn market cap in 2020, but it might go to $0 as well. SPWR might get to $10b - $15b in 2020, but it will not go to $0; and I am fairly certain it will be above today's price unless their is a technological advancement that makes them obsolete; but by that time they will have enough cash to take advantage of new technologies.
I just see SPWR as a much safer play that could still yield very high rewards over the next few years.
I can kind of see the cup with handle that you are talking about, but FSLR needs to go up 15% to break out of it, and as much as I would like to see that happen tomorrow, it probably won't. But if we have a strong follow-up week next week then it can happen. FSLR is up 7.5% AH, but tomorrow is a whole new day; I actually wouldn't be surprised to see this stock go up 15%-20% tomorrow. I would be a buyer if I were sitting on the sidelines. Icahn must be happy.
But with great results from SPWR and great results from FSLR, I feel like this might be the start of another solar rally. I just hope that the general market doesn't decide to correct after this rally we had. I think that when you combine FSLR's and SPWR's earnings the market will definitely take notice and I wouldn't be surprised to see some institutional money start pouring in to this sector over the next few days. I am hopeful that CSIQ decides to announce earnings next week, because they are going to be great as well; that would really light a fire under these solar stocks.
I would like to hear what the analysts have to say on SPWR and FSLR earnings. Can someone please post some of the analyst comments here if you have access to them?
I am bullish all the way on solar, and it is only getting started.
