Analyst sees spark yet in solar, clean-tech stocks - JSOnline
There may be ups and downs, but clean technology is a long-term trend.
Take the solar industry.
Many analysts expect an oversupply of solar panels in 2011 that could weigh on stock prices of companies in that industry. But J. Michael Horwitz, Baird's senior research analyst for clean technology, isn't convinced.
"As prices of solar panels continue to come down, new markets open up and surprise people with how strong demand is," Horwitz said.
Solar panel demand has almost doubled beyond what analysts estimated at the beginning of the year, Horwitz said. The market is expecting flat demand through 2011, with a huge amount of supply coming online, he said, but there are challenges to that supply getting to market due to potential bottlenecks in the supply chain.
SunPower Corp. (SPWRA, $12.91), San Jose, Calif., is Horwitz's top pick in the solar industry. The maker of solar electric power technologies has the highest efficiency, best product on the market, Horwitz said.
SunPower's panels cost more than Chinese alternatives, and some fear an oversupply will make them less attractive. But Horwitz says those concerns are overblown.
SunPower has done a good job of bringing its costs down and has a strong backlog that consists of projects the company is developing and building with its own panels. One such project, called California Solar Ranch, will increase by 40% the total megawatts of power generated by large-scale solar plants SunPower has built around the world, Horwitz said.
"The Chinese competitors don't have control like SunPower has control of its own business and its own pipeline," he said.
The biggest risk Horowitz associates with the stock is that SunPower might not be able to continue bringing costs down. But he expects the company to benefit from a recent partnership with AU Optronics, an Asian solar panel provider with expertise in scaling up low-cost manufacturing, he said.
SunPower's 52-week has traded in a range of $9.61 to $26.35. Horwitz has his highest "outperform" rating on the shares and said they could trade as high as $20 in the next 12 months.
