Mainly venting frustration with the sector, but the entire solar industry has been trading like the sun will never shine again.
Maybe oil pressures, maybe the market has lost interest, who knows.
I certainly don’t think this is a good place to sell, but I’m curious if anyone is adding here? And if not, would a further drop make you more apt to add to SEDG? I currently have some, debating more, but not sure if I want to expose myself to it more than I am.
Yup, that I saw. I’m more interested in if people think companies like SEDG look like a good deal down here or are they in free fall a la 3D printers in 2013
I’m more interested in if people think companies like SEDG look like a good deal down here or are they in free fall a la 3D printers in 2013
Hi Mike, no comparison. The 3D printers sank because they never managed to grow earnings, and all the hoopla never came through. SEDG is already growing earnings very rapidly (by 500% last quarter, for example). Revenues up by 72% last quarter. The solar companies have been hit by the falling price of oil (although oil isn’t used to make electricity, so it makes little sense). And hit by the end of the government support at the end of 2016, which probably does make some sense.
I did add to my position today.
Disclaimer- I am NOT a big dog on this board. So this is IMHO.
This shouldn’t look like the 3-D Printing stocks (SSYS, DDD,XONE) because they are story stocks. If I’m not mistaken, THEY DO NOT, NOR HAVE THEY EVER MADE, A PROFIT (not yet anyway)!
At worst, SEDG has a slight comparison to PRLB (which does make a profit).
However, PRLB (whose stock price grew and then dropped, but basically ended up pretty flat) is not a Saul Candidate stock (PRLB has a poor 1YPEG, high PE, earning deceleration), so SEDG should be doing better. SEDG has great earnings (and low PE, great 1YPEG, etc).
It’s weird that I’m reading how bad the S&P 500 earnings are (yet still doing pretty good stock price wise), yet the companies I’m in are having great earnings, and getting no love.
I know that some of my stocks have some headwinds to overcome (short attacks, general weakness in the sector, etc), but dammit they’re making money hand over fist!
My best guess is that this stock is going to have to wait a quarter or two to prove to the market that these ARE the money makers. Until then, this craziness will continue.
FYI: I would be interested in one of the more experienced investors on the board to chime in. I might be talking out of my butt.
still loooong SEDG
In 2014, the United States generated about 4,093 billion kilowatthours of electricity.1 About 67% of the electricity generated was from fossil fuels (coal, natural gas, and petroleum).
Major energy sources and percent share of total U.S. electricity generation in 2014:
Coal = 39%
Natural gas = 27%
Nuclear = 19%
Hydropower = 6%
Other renewables = 7%
Biomass = 1.7%
Geothermal = 0.4%
Solar = 0.4%
Wind = 4.4%
Petroleum = 1%
Other gases < 1%
The solar companies have been hit by the falling price of oil (although oil isn’t used to make electricity, so it makes little sense).
I think the connection is that when fossil fuels are cheap, there is little financial incentive to invest in the capital-intensive up-front costs of solar systems. Thus, the cheap oil depresses demand for solar products. There are three drivers for residential conversion to solar power:
(1) Improved monthly cash flow – SolarCity promises that their leased systems (which require no up-front capital investment by the customer) will lower their monthly electricity costs by at least 15%.
(2) Desire to be ‘green’ – Those who feel compelled to lower their carbon footprint find it worthwhile to invest in solar power
(3) Desire to be “off the grid”, or energy independent. A small, but vocal group.
If your electric utility is using natural gas power plants, then the cost of electricity is probably quite low, thus making the first pitch less compelling. Thus, the price of fossil fuels will indeed dampen the demand for solar products.
Tiptree, Fool One guide and fellow investor
Saul, thanks for the reply. You are correct, 3D printers are a bad comparison. I was thinking in the sense of a segment that the market had a lot of positive sentiment about and then can’t run away from fast enough… but yes, the earnings are a huge difference
Speaking of no profit, anyone see XONE today? Ouch.
I think SEDG is one of the most compelling plays in solar. I did add a few days ago at a similar price before ER. While these down moves have been fast, it has made higher lows and has left long tails below or near 17 everytime, which suggests that buyers there are still thinking its a bargain at that price. (chart chat maybe no one cares but helps me)
Gonna hold what I have till it quiets down, but I may get more on newsless dips if there are more.
Interesting chart on fuels used for electrical generation. The problem facing solar is not low-priced oil, it’s cheap gas and ever increasing costs of burning coal. Although it’s not a cheap conversion to migrate to gas fired boilers from coal fired, it is a one time capex.
Many utilities are finding it cost effective to make the conversion. Especially with the new generation of high efficiency gas powered generators that use both the heat from burning gas to create steam for generation, but also use the gas directly to spin a turbine generator.
I remain long SEDG despite these headwinds. They have more markets than just the US. They have a new generation of products. They continue to drive down their manufacturing costs, etc, etc. I can’t predict when a turn around for them will come, and could be argued that investment funds could be more profitably deployed than waiting for SEDG to take off, but I think the recognition will come sooner than many expect. And long term, solar is a growth industry world-wide, especially when coupled with storage systems such as those now offered by Tesla. Battery storage is DC, so the SEDG products play here as well.
I personally love the chart chat. It is confusing to me at this point but it seems to be a useful to a very useful tool. I have noticed several times when a “chartist” (what is the correct term here?) will say we will see movement in a particular direction on this stock/company and it actually plays out. I am not sophisticated enough to know all the reasons that a particular stock might be moving so I am not sure what my comments are worth here.
I also understand I am a newbie to this board and that I may not be aware that chart chat is not what most people want or what Saul wants. I will say I have not seen any negative posts regarding this topic yet.
I am looking forward to the potential “face-ripping” upward movement in AMBA that you spoke about.
"but I’m curious if anyone is adding here? "
Hi Mike(if it’s okay to call you that),
I am adding to SEDG today and once the cash comes in from the bank, SWKS tomorrow. Thanks for Saul’s board and many highly respected posters, I came across SEDG.
I finally pulled the plug and bought my first bite after the recent outstanding earnings report. Nothing has changed from that day to today, and I have some cash sitting by, SEDG has dropped on no news, so why shouldn’t I buy. Most of my buys in the last year has been in the energy sector as I remain reasonably sure that oil prices will eventually tick up. Weeks, months, years I don’t know, but most certainly not a decade. With it, the solar, natural gas, energy services and equipment sector et al should bounce back.
thanks for your posts, they are very informative to read,
well i suppose not really on no news, there is SOME, even if irrelevant news
“Markets continue to become more risk-averse towards two once-high-flying industries: Solar stocks are adding to the Tuesday losses seen following SunEdison and Canadian Solar’s earnings (TAN -2.5%)”
Mike is okay of course.
Well, the overall rotation of the market away form solar is relevant news. Perhaps little on the company’s performance itself, but even being a compelling buy in a terribly performing sector makes it relevant.
You can buy the best company ever at the wrong time and never make a profit on the investment. Ideally in the extreme long term they should increase value more than the highest enthusiam phase, but at the same time, when a whole sector is being demolished on a daily basis, I’m more apt to let the speed settle down and pick up the pieces later.
A 15 handle looks like a great buy today, but it could easily be 13 by the end of the week. I think I was a little trigger happy before earnings, so I don’t want to allocate more here until it looks like a clear bottom.
Happy to hear my ramblings can provide some value, even if my approach is a hybrid of the approach on the board and other stuff that works for me