By Daniel Sholler, Univesity of Pennsylvania
Assessing portfolio composition amidst economic changes is vital to the success of investment clubs and portfolio managers alike. Becoming heavily invested in one industry obviously has its benefits and drawbacks, but ensuring that the former outweighs the latter relies upon an investor’s ability to reevaluate the progression of the industry as frequently and thoroughly as possible. Early last week, many were abandoning ship with solar stocks. However, earnings reports from JA Solar (JASO) changed a lot of minds. Even prior to the numbers being released, I felt that clean technology is still a sector to remain confident in; clearly, though, some readjusting must occur given recent news.
Early Earnings Reports
Initial earnings reports from Evergreen Solar (ESLR) caused a bit of unrest amongst analysts, but I don’t think these shortfalls give an accurate outlook on the solar sector. JA Solar posted downright stunning numbers last week, showing promise for an industry that has fallen under heavy criticism. JA Solar is a model corporation for renewable resource development.
Economic recovery in the United States will largely depend on development of renewable resources. While the solar industry’s fate is still in question among many investors, I’d take advantage. JA Solar's numbers will make it difficult to "buy low," but going deeper into solar technologies with stocks like Trina Solar (TSL) is a move many should consider.
Government Investment to Continue
The main reason I’m sticking with solar stocks is the U.S. government’s commitment to renewable energy’s potential. Rhone Resch, president of the Solar Energy Industries Association, stated that an expected 45,000 new jobs would be created in the industry if tax incentives and government initiatives held up in 2010. Wind and solar would be at the forefront of the changes.
I tend to believe in the potential of the renewable energies sector. In a rough economic climate, this industry has been one of the lone bright spots. In recent months, several economists have doubted the U.S. economic growth rates and have cited the lack of innovative technology as the primary reason. Government commitment to developing these renewable resources, as well as parallel efforts in countries like China, will keep the solar and other sectors afloat during recovery. In addition, investors will see promise in the industry later this year as it continues to create jobs amidst a lagging unemployment picture.
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