The turmoil in the markets makes it too easy to justify
selling any stock these days. Yet, while
panic never helpsinvestors, it's still a good idea to
play devil's advocate with investments.
Consider solar component and systems maker
SunPower (Nasdaq: SPWRA). Though the sector
shows plenty of promise, you'll find a few of the 1,569
Motley Fool CAPSmembers weighing in on the company
offering reasons to be bearish.
At The Motley Fool, we like to consider both the good and
bad sides of an investment. Here, I'll highlight three of the
main bearish arguments on SunPower. Be sure to read
the bullish sideand then weigh in with your own comments
below, or rate SunPower
in
CAPS.
Oversupply: According to a recent report by
iSuppli, inventories are spiking in the solar supply chain
because of low demand. While companies like
Trina Solar (NYSE: TSL) are planning to
crank up capacity, the credit crunch has dried up funding
for projects, and countries such as Spain have cut back
incentives. The combination of the excessive market push and
the limited customer pull has many investors concerned about
the effect on prices.
Courting demand: While U.S. and Chinese
stimulus dollars are expected to help demand for solar power,
some investors don't think it's nearly enough to drive the
industry up in the near term. After an outlook of oversupply
and weak demand was issued, one Jefferies analyst recently
downgraded a slew of solar stocks including SunPower,
Suntech Power (NYSE: STP),
Solarfun Power (Nasdaq: SOLF), and
Energy Conversion Devices (Nasdaq: ENER). And
a Soleil Securities analyst had a
similar negative opinionof
First Solar (Nasdaq: FSLR).
Short on cash flow: SunPower tapped the
capital markets in May with a dilutive offering to pick up
more cash, and like
Evergreen Solar (Nasdaq: ESLR),
it has been lackingin its ability to generate free cash
flow. As of the latest quarter, it had
burned throughmore than $130 million in cash over the
past year. Â
To see details of what CAPS members
are saying
nowabout SunPower, just click on over to
Motley Fool CAPSand have a look -- or add your own
thoughts in the comments box below.
This article was originally published as
3 Reasons to Sell SunPower Todayon
Fool.com
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