Solar Soaring Valuations…

If you’ve been reading my blogs about solar valuations, I have felt for some time that valuations had hit their peaks or that the wild increases were to abate. Having invested in some of the solar companies, there’s nothing more than I would like to see than continued sharp rises.
Nevertheless, that is not sustainable and the issue becomes not “whether” there will be a sobering period, but “when”. Despite all the added business in solar, there will be consolidation as small players are taken out. They will left to work in niche markets (such as ICP SOLAR currently does) or wiped out if their game is in the arena of the big boys.
So this brings me back to the current scenario where companies are at 40times earnings and then again…most solar companies don’t make money. Here begs the question..if you own stock in a public company in the solar business and you don’t cash out now, are you a fool?
I think the answer lies in the business model which they have or will have in the future. If the company you’ve invested in is able to carve itself out a niche, then it can stand out from the noise and continue to actually soar even when the commodity plays are crashing due to oversupply. So will there ever be oversupply? Well, have you ever known a market that NEVER caught up? Not me.
This is business. Take out the emotion and figure it out. Then pick the stocks that will have a distinction which will carry them through a glut. Either a better production model or marketing model. Its one of those two that will mark the survivors of the future solar industry.
Sass