<If a value stock by the screens was purely China, we eliminated it because of the accounting woes and concerns facing that entire class of companies.>
This is exactly what Mr. Market is doing, and it's an example of market inefficiency. Mr. Market (and the author of that article), can't be bothered to look at individual companies. Some Chinese companies have "accounting woes", therefore don't buy any of them. Guilt by association. As if U.S. companies haven't had their fair share of "accounting woes".
The Chinese companies are rapidly gaining market share, and dominating the entire industry. An investor who isn't willing to buy Chinese companies, shouldn't buy any solar companies, because current evidence says the Chinese are the winners in this industry.
I think P/B and forward PE are useless to value these companies. The "B" and "forward E" in those ratios are random numbers. What was Solyndra's book value?
<solar PV has fallen from grace quickly as government subsidies have been reduced>
Overcapacity, not falling subsidies, are the reason these stocks are down. China and Japan have recently enacted a FIT, and California will probably follow in 2012. So government support for solar is broadening. In addition, the subsidies are falling, because manufacturing costs are falling, so less subsidies are needed at each level of demand. This is a bullish trend, and indicates the industry is maturing, and getting closer to grid parity. The author has it exactly wrong.
Solar is a small part of AMAT's business. It will trade based on the semi-equip cycle, with solar an incidental effect.
WFR is a short at any price. It sells a commodity, with low barriers to entry.
The market for equipment for solar and LED, are probably going to be depressed through 2012. Therefore, GTAT is a buy, at lower prices. Much lower. |
