Solar Sector Heats Up as Momentum Could Be Returning; TAN ETF Up 7.5% Today

January 11, 2012 11:42 AM EST
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Solar stocks are performing very strongly Wednesday morning following a number of broader news items which are turning heads. The TAN ETF (NYSE: TAN) is up about 7.5 percent at last check.

A report out of China's National Energy Administration said the nation is planning to add about 3 GW of solar capacity over 2012, double China's total solar capacity at the end of 2011.

Elsewhere, research from Digitimes suggested the global solar market will grow by nearly 12 percent to 26.9GW this year. In 2011, faced with oversupply and high PV prices, the industry still managed to eke out 17.1 percent growth to 24 GW.

Though 2012 might see further subsidy restrictions in Europe from countries like Germany, Italy, and France, the lower PV prices have sparked new interest from areas like China, Japan, India, and the U.S., the Digitimes report said.

On the analyst front, a note from Deutsche Bank's Vishal Shah may have some optimistic investors jumping back into the sector following a more than 65 percent decline last year (as measured by the TAN).

Citing recent checks following "the surprising 3GW German market December data announcement earlier this week," Shah believes inventories at record lows combined with record shipments last month will likely "create a sense of rush among installers in 1H12 before another anticipated 15% subsidy cut from July."

The analyst also considers recent momentum from China, India, and non-Euro solar markets like the US as continuing into the second half of this year. "Given the rising 1H12 demand prospects in Europe/US we now believe the recent trend of encouraging poly pricing data points could likely continue for the next month and as such, likely drive solar stocks higher.

Deutsche Bank's top picks within the sector are Trina (NYSE: TSL), Jinko (NYSE: JKS), Yingli (NYSE: YGE), Suntech (NYSE: STP) and Renesola (NYSE: SOL).

  • First Solar (Nasdaq: FSLR) up 5.7 percent;
  • LDK Solar (NYSE: LDK) up 6.6 percent;
  • Suntech up 8.6 percent;
  • Yingli up 11.7 percent;
  • Trina Solar up 12.2 percent;
  • ReneSola up 16.3 percent;
  • Jinko up 17.3 percent;
  • JA Solar (Nasdaq JASO) up 10.4 percent; and
  • SunPower (Nasdaq: SPWR) up 0.9 percent.

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