Solar Update: Ongoing Volatility

Markets have been up since early this week. The Dow is up nearly 600 points since Monday's close and all three of the major indices are reporting gains. Wind, smart grid and efficiency stock are all up, yet with the exception of CSIQ, The Green Market's solar stocks were down yesterday, today solar stocks are back up again.

There has been a lot of volatility in the clean tech sector. Many investors are hoping to see returns from Obama's massive Green stimulus while others are concerned that government involvement is distorting market forces. As anticipated by The Green Markets Solar Analysis last week, solar has been especially volatile.

Last Friday March 6 a Fool article put forth 3 reasons why solar module maker First Solar (Nasdaq: FSLR), warrants a sell recommendation. Cost of FSLR is high relative to other stocks that are at bargain-basement levels. The outlook for 2009 is grim, with worse-than-expected quarterly losses and weak outlooks coming from STP CSIQ LDK JASO. The level of government stimulus relief may be inadequate to entice many solar consumers. With the majority of solar projects financed by debt, financing will be a problem for both buyers and providers.

Despite this pessimistic assessment of industry leader FSLR, there continues to be considerable optimism for the cleantech sector. As reported in another Fool article, "Investment in the sector continues to be hot. Recent data from Cleantech Group showed that venture capital investment in green tech increased 38% in 2008 to $8.4 billion. And support of clean, renewable energy and energy independence has become one of the key strategies in the new federal budget...John Doerr, one of the world's most successful venture capitalists, called cleantech the "biggest economic opportunity of this century."

Solar stock is volatile to be sure, but there are opportunities developing if you know what to look for and what to avoid. Consider solar stock with a compelling valuation and remember, the key to capitalizing is buying at the right price.