SPWR – SunPower Corporation (Nasdaq) – (Closing Price on Friday 1/4/08 – $126.12)
Stocks related to solar power made a tremendous run in 2007 but they are currently grossly overpriced and overdue for a pullback. The insiders of most of these companies have been dumping shares like crazy which is never a good sign. Also, the market is expected to have a turbulent year so I think now is a good time to short some of these companies.
My solar pick to short is SunPower Corporation. SunPower Corporation has shown strong growth over the last year but it currently has at a trailing PE ratio of 631 (that is ridiculously high). For growing companies a trailing PE is less important than the forward PE but SunPower’s forward PE is also astronomical (126 based on the high range of their forecast of GAAP earnings between $0.85 and $1.00 in 2008).
While investors have been buying, the insiders of SunPower Corporation have been dumping a huge amount of shares. Insider selling is never a good sign and the amount of selling that has taken place at SunPower should cause a lot of concern. (more…)
The Stock Market in 2008
Last year I made the prediction that the “market will end the year essentially where it began or down on the year. If the market is up on the year I don’t see it being up very much.” My prediction proved to be prescient as the S&P 500 finished with a 3.53% gain, the Dow with a 6.43% gain, and the Nasdaq with a 9.81% gain.
If you take away the Santa Claus rally at the end of the year, which has now quickly evaporated, my prediction of flat growth would have been proven correct. This is in contrast to most of the stock market prognosticators who where predicting another strong year (15% or greater) even though there were signs of a slowing economy and the housing bubble was beginning to deflate.
This year I have noticed that not many commentators are predicting how much the market will gain or lose this year. I guess they didn’t want to eat any more crow like they did last year. They are mentioning that the stock market is in for another volatile and challenging year. I agree. (more…)
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