Bought more FSLR today, at $126.
Why I'm buying now:
1. I'm not smart enough to pick the bottom.
2. I still expect overcapacity overall in solar in 2011, and falling prices. However, I'm also thinking the "bankable" low-cost producers are going to be relatively immune to the oversupply problem. I'm impressed by how much of 2011 production is already sold. That is, I'm seeing a "winnowing out" in 2011, but the quality names won't sell off much.
3. I'm less convinced this is a commodity industry. The "buyers" of solar panels, are really the banks that finance large-scale installations. To a greater extent than I had previously thought, they will pay more for "brand-name" producers and proven technologies.
4. Barriers to entry in this industry are rising. By end-2011, all the major companies are going to have 1GW+ manufacturing capacity. The capital cost to build that much capacity is high enough to deter all but the deepest pockets (like GE and the Chinese government).
5. FSLR is more competitive vs. the Chinese companies, if the RMB rises and the Euro falls. This looks possible, as the dominoes fall in Europe: first Greece, now Ireland, then Spain, then...
disclosure: long FSLR at $125 and $126, considering going long TSL, considering shorting LDK |
