LOS ANGELES, Jan 9 (Reuters) - Solar energy stocks fell for the fourth straight day on Wednesday as investors worried that the recent pullback in oil prices and a weakening U.S. economy could hurt domestic demand for alternative energy sources.
Since last Thursday’s market close, each of the stocks has lost about 20 percent in value.
“After last year’s gains, this is a healthy pullback,” Raymond James analyst Pavel Molchanov said in a client note on Wednesday, noting that this was the fast-growing sector’s first major pullback since early November.
A drop in the price of crude on Monday had a “psychological significance” for solar stocks, Molchanov said, even though oil prices don’t have a direct impact on solar demand. He added that fears of a U.S. recession are also affecting the sector.
Solar stocks posted massive gains in 2007 as concerns about climate change and soaring prices on fossil fuels boosted investor interest in renewable energy sources.
Many investors, however, are skittish about their now-lofty valuations.
As of Tuesday’s close, First Solar shares traded at 116 times analysts’ average 2008 earnings estimate. SunTech Power shares, meanwhile, carried a multiple of 38, and SunPower traded at 56 times 2008 earnings.
Still, Molchanov remained “very bullish” on solar stocks. “We see this pullback as an opportunity to buy on the dip,” he wrote.
Among other solar stocks, shares of Trina Solar Ltd TSL.N were down $4.60, or 10 percent, at $41.10, while JA Solar Holdings Co Ltd's JASO.O ADRs were down $6.98, or 10 percent, at $65.29. Evergreen Solar Inc ESLR.O shares were down $1.44, or 8.4 percent, at $15.68. (Reporting by Nichola Groom)
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