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Outlook for Solar Stocks Still Bleak Despite Recent Rally

Jan 9, 2013
Source: 
(Reuters)

Solar stocks kicked off 2013 with a sharp rally, prompted in part by last week's news that a company controlled by Warren Buffett's Berkshire Hathaway Inc would pay up to $2.5 billion for two SunPower solar projects in California.

This week, the stocks retreated after many investors and analysts called the moves overblown, making the Buffett rally look more like a short-term bump.

"The Buffett-SunPower deal is good news ... but individual investors should not interpret it as a buying signal for solar stocks," said Yves Vaneerdewegh, who manages the Luxembourg-based 11 million-euro ($14.37 million) Quest Cleantech Fund. He added that the sector's recovery may take much longer, and that stocks could tumble dramatically once again.

The rally, which started in November as China signaled willingness to prop up its ailing solar sector, was bolstered last week by the resolution of the U.S. "fiscal cliff" as well as a slight uptick in the price of polysilicon, the key raw material in photovoltaic solar panels.