heated to new highs Wednesday afterMEMC Electronic Materials (
) eclipsed fourth-quarter estimates and President Obama in his
State of the Union speech the night before called for more green
Guggenheim Solar (
) surged 1.45% andMarket Vectors Solar Energy (
) 2.67%, each climbing to nine-month intraday highs.
As the No. 1-performing industry group this year, they've
vaulted 22% year to date and an eye-popping 44% the past three
months. By contrast, SPDR S&P 500 (
) added 7% and 11% in the same periods.
MEMC, a top holding in both ETFs, popped 7% to 4.82 Wednesday,
near a one-year high in heavy volume. The silicon wafer maker
reported Q4 earnings of 8 cents a share while analysts expected
zero profit. It lost 29 cents a share in the year-ago period when
it took a $1.12 billion hit for restructuring.
Revenue totaled $704.3 million, topping forecasts of $663.1
million. The company said revenue for its semiconductor materials
unit was flat as higher sales volume offset lower prices. Its
solar energy unit's sales in terms of megawatts were down year
After years of price declines due to excess output in China,
panel prices and polysilicon -- the key raw material in solar
panels -- have bottomed, Credit Suisse wrote in a weekly report
Its analysts believe demand is gradually recovering in various
markets, policies in China could boost demand and there's a
possibility that solar firms could restructure as master limited
partnerships or real estate investment trusts.
But excess supply in China needs to be burned off and several
companies need to have their debts restructured or written off,
Credit Suisse wrote.
China's initiatives would pump another $1.1 billion in
subsidies into the sector and offer solar firms cheap long-term
loans to reignite the export-heavy sector, Zacks Equity Research
wrote in a report Tuesday. What's more, projects valued at $6.8
billion are under development in the United Arab Emirates,
Kuwait, Oman, Egypt, Jordan and Morocco, Zacks wrote.
The number of Chinese solar manufacturers tumbled 42% in 2012
and the industry will likely shrink this year as more firms go
out of business, get bought out or merge with others, according
to S&P Capital IQ.
"This count will continue to fall in 2013, especially if
Europe decides to inject similar tariffs that the U.S. did on
China-made solar goods," S&P analyst Angelo Zino wrote in a
report Jan. 29.
Fewer players would reduce output and thereby boost prices.
"Since the start of the year, prices are up 3.9% for polysilicon,
1.1% for wafers, 1.5% for cells and 0.5% for c-Si modules," Zino
wrote. "The rise in polysilicon prices should be a precursor that
supply is beginning to tighten across the chain."
He sees the industry survivors returning to profitability by
Obama On Climate
In his State of the Union speech Tuesday night, the president
called on Congress to "pursue a bipartisan, market-based solution
to climate change."
If it doesn't, President Obama said he would have his Cabinet
come up with executive actions to speed up the country's switch
to renewable energy. He also called for using some oil and gas
revenues to pay for research and technologies to get cars off of