JA Solar Holdings (JASO), a major China-based alternative energy stock, mentioned a proposal to go private today. JASO stock would apparently be bought out in full by its chairman and CEO, Baofang Jin, and a company called Jinglong Group of which he is the sole director.
The proposed premium for JASO stock is steep — 21% or so, at $9.69 per share for a stock that was trading just slightly above $8 yesterday.
JA Solar shareholders should be happy about the news, but what about the rest of the energy sector?
Bears may be quick to point out that one well-heeled Chinese businessman doesn’t make a trend, especially after the disaster for Hanergy Thin Film Power Group, which recently tanked.
But look beyond these individual headlines and you’ll see that solar stocks are indeed hot, and alternative energy investments are going like gangbusters in 2015.
Solar Stocks Surge Amid Cheap Oil
With all the talk in 2015 about crashing oil prices and the pain that has been caused in fracking communities as energy companies pause exploration and lay off workers, alternative energy hasn’t really been on many investors’ radar.
That’s a shame, because a host of alternative energy stocks have put up quite a run, and all manner of alternative energy ETFs have been trouncing the broader market as a result.
A few names are the Guggenheim Solar ETF (TAN), which is up 21% year-to-date, and the PowerShares Global Clean Energy Portfolio (PBD) is up 17% in 2015. As for individual winners, solar leaders First Solar (FSLR) and SunPower (SPWR) are both up strongly thanks to talk of a yieldco spinoff this year, with FSLR stock up 11% and SPWR stock up 18% YTD.
Heck even wind players are in on the alternative energy trend, with the First Trust ISE Global Wind Energy Index Fund (FAN) up 17% this year.
So what’s behind the run? Well, investors sold off all energy stocks sharply at the end of 2014 — including solar and other green-energy stocks. However, major alternative energy stocks are rebounding sharply amid pretty darn good numbers from companies in the sector, as well as the hope of long-term growth as the world continues to look at reducing carbon emissions.
Alternative energy is certainly volatile and doesn’t have a history of sustained returns that beat the market. However, it’s undeniable that a well-timed swing trade a few months back would have you sitting pretty in 2015.
Looking forward, the situation doesn’t appear to be as bright, with many solar stocks including FSLR and SPWR starting to fade more recently. However, the longer-term trends are certainly higher and a focus on cleaner energy sources could make these plays great long-term holdings.
So if you missed the JASO stock deal, don’t fret. There are still sunny days ahead for solar stocks.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
