THE ISSUE: The once squeaky-clean solar power industry hits
its nadir as Solyndra's executives invoke the Fifth Amendment
when Congress asks the solar power manufacturer Friday to
explain how it took a $535 million loan and quickly went
bankrupt. Will the shakeout it spurs in solar create value in
By Sam Forgione
NEW YORK, Sept 21 It may be nothing more than a
political dustup and Washington scandal that will be forgotten
by the winter solstice, but the quick failure of Solyndra
paints a big black mustache on the solar industry's happy
Sun power was one of the hottest and worthiest of investing
sectors as oil prices surged and alternatives were in demand.
The sector cooled off over the past year because the
hyper-competitive industry may have overestimated demand.
Now Solyndra has become a symbol of the bust after burning
through billions of investment dollars and then burning its
bridges in Washington by failing to repay over $500 million in
Federally guaranteed loans.
Solar is still a growth industry, though, and overall
demand for energy is still rock-solid, even in a slack economy.
Survivors may emerge.
Indeed some see the industry going through a much-needed
shakeout. Sunnier times could return for the stronger players.
How can you avoid being burned?
SOLAR INDUSTRY'S RISING STARS
The demise of Solyndra, which shut down its operations over
the summer, leaves a clear leader in First Solar (FSLR.O), says
one fund manager specializing in the sector.
"First Solar still has the lowest cost structure in the
entire industry, good brand-name recognition, an active
pipeline to develop projects, and the company is in good shape
for the long term," said Shayle Kann, Managing Director at
Green Tech Media Research.
Yingli Green Energy Holdings (YGE.N) is another player that
has kept costs in line and built its brand.
"The solar market will be growing year after year for the
foreseeable future," said the analyst. Demand is growing in
China and India, as well as the United States.
But solar bulls need to be patient.
"Don't go bullish for short-term gain. Look at it for
BUY OTHER ALTERNATIVES
"The publicity will wash over." said Greg Payne, portfolio
manager at Greenchip Financial, referring to the Solyndra
Until it does, Payne is going with the flow of water
"Hydro is safe because there's more predictability on
maintenance and operation expenses, and it has a longer
lifetime," Payne said.
Some of the alternative energy providers are suffering
because "supply and demand are not in balance."
Not so with hydro, which Payne said is "the best asset
among renewables," citing Etrion (ETX.TO), Enel Green Power
EGPW.MI,and Brookfield Renewable Power BRC_u.TO as smart
Ranging more broadly, Payne sees spinoff benefits for
electricity and water infrastructure companies as the search
for energy alternatives gains traction.
"Suppliers of electricity and water infrastructure are
oligopolistic, have stable-margins, reasonable valuations, and
better balance sheets," he said before recommending Schneider
Electric (SCHN.PA) and ABB (ABB.N) in Europe,and Cooper
Industries CBE.N and smaller companies Itron (ITRI.O) and
Elster ELT.N in the U.S.
Global Tech Strategist at Auerbach Grayson and Co. Richard
Ross said that it might just be best to avoid the alternatives
altogether while the entire solar industry is "painted with the
brush of Solyndra."
For investors itching to find the growth industries of the
future, he recommends the safer, better traveled path offered
by tech stocks like Apple (AAPL.O) and IBM (IBM.N).
"IBM on the corporate side and Apple on the consumer side
are well-entrenched with customers and have steady revenue
streams," said Richard Ross,
"We have to wait for the dust to settle and look for safety
and security," he said.
(Reporting by Sam Forgione; Editing by Richard Satran;
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