Solar stocks saying "don't cry for me SPAIN"

Solar sector which is the brightest among all sectors...is being treated WORST than sub-prime laden Financials lately.....

While some financials have doubled in 3 trading days......Solar stocks have broken down technically......

Are investors/traders crying for SPAIN too much?????

So how big is SPAIN in terms of total world demand????

Spain is 25.6% of world demand for 2008 which is expected to become 7.6% in 2009...

World demand is 3,900 MW this year...which IS expected to grow to 15,000 MW in 2012...a whopping 285% growth in next 4 years...a 71% annual growth rate per year...or 3750 MW growth every year ...almost as much as 2008 world output !!!!

Spain is proposing to cut their subsidy to 300 MW from expected 1000 MW in 2008...a 70% proposed cutback......

As you can clearly see that rest of the world will easily pick up 700 MW of Spain contraction as we will further add 3050 MW on top of Spain 700 MW for a total add-on of 3750 MW in 2009....

Based on "simple math based on current growth rate" 2009 SHOULD add 3750 + 3900 current base for a total of 7650 MW??? can it be less than this OPTIMISTIC number???

Yes.....

So let us take 700 MW of Spain drop from world demand completely...then we get current 3900 MW+ 3050 MW for 2009...then we get a total of 6950 MW ...a conservative growth rate of 78.2%......

Tell me .....which Sector is expected to grow near 78.2% in 2009......

Or to be SUPER CONSERVATIVE let us work with long term growth rate of 71% which will increase worldwide demand by another 2769 MW......

So...the bottom line IS 71% growth rate is nothing to SNEEZE @........

Which companies have the biggest exposure in Spain???

STP,JASO,YGE,CSIQ,SPWR & TSL......which Barron's is saying have substantial revenue from Spain.....

BUT if you look @ the tape of these stocks ...it gives mixed picture in terms of price decline....

So.....how severe is the haircut TECHNICALLY speaking ????

I am using 50 DMA as a reference point...to see how far each stock is below 50 DMA ....based on the stocks I am analyzing they are ALL below 50 DMA????

FSLR <3.2%>
SPWR <5.2%>
STP <15.2%>
LDK <16.9%>
YGE <18.7%>
JASO <23.2%>
SOL <25.7%>
CSIQ <26%>
TSL <29.5%>
SOLF <30.3%>

I personally believe that SPAIN issue has been discounted with the worst case scenario......some stocks are trading @ or near IPO prices.....while their business has GROWN 300% to 500%.....

I am hoping for these stocks to make a sharp comeback on any positive legislation/initiative from US,Japan,Italy,China,India who are all feeling the need for more Electricity .........

I have every reason to continue my CONVICTION in Solar stocks as they are beaten to one year ago levels.......in most cases !!!

Cost of Polysilicon are also coming down from current $450 per Kilo.......the actual cost to produce is only $30 per Kilo...so if Poly comes down to $250...still Wafer makers like SOL,LDK & WFR will laugh all the way to the bank......moreover the cost of Solar cells will come down sharply for wider adoption/parity with other competing energy......

So ...stay with Solar stocks & do not CRY for SPAIN !!!!!!

Future is very SUNNY for MOST Solar stocks $$$$$$

BLOG does NOT give buy or sell.

Saleem