With third quarter numbers starting to surface this week, it's not too early to start thinking about next year. . .
And there's plenty to think about.
Stocks in general are sitting on 52-week highs, leaving even the most ardent bulls with a finger on the sell button, ready to take profits at the first sign of trouble.
The quarterly reports coming out over the next few weeks could be that sign, since this earnings season will still see a lot of purging — even with the recession waning.
If you know what's in store for the long term, any earnings-induced sell-off could present a monumental buying opportunity. Over the next few weeks, I'll examine a variety of energy sectors and give you my take on the 2010 picture.
Solar Stocks: A Recap
Upon review, the second quarter wasn't at all bad for solar stocks.
Most household names reported earnings higher than Street estimates, including First Solar (NASDAQ: FSLR), Suntech (NYSE: STP), and SunPower (NASDAQ: SPWRA) — all of which turned a profit.
Several companies also reiterated or raised forward-looking guidance.
But I'd be remiss if I didn't say there was a feeling of anxiety brewing. Some second-tier companies lowered gross margin outlook as a result of falling average selling prices (ASPs). Module prices fell ~9% in the quarter, ranging anywhere from $2.50-$3.00/W, and were expected to decline further in the second half of the year.
Further up the supply chain, prices were also falling for polysilicon, the industry's raw material. Prices have been reduced by more than half and are now hovering in the $50-$60 per kilogram range. Producers like MEMC (NYSE: WFR) need prices above ~$28 to turn any kind of profit.
So the pressure was mounting. And the strategy, by most accounts, was to increase volume to offset falling prices. Global stimulus packages were created to help do just that.
Upcoming earnings numbers will show whether or not that strategy worked.
Solar Stocks for 2010
There is certainly much to consider when looking at stocks with a 12-month lens.
