Late last week, Gaiam Inc (GAIA), the everything "green" retailer announced plans to spinoff its Real Goods Solar unit (to trade under RSOL on the Nasdaq) which installs residential solar energy systems in California, which claims 2/3 or the residential solar market. If you’re a big believer in the green movement like I am and believe it can provide outstanding returns to your portfolio over the next decade (like I do), then Gaiam (GAIA) is a company to watch and this spinoff may just give the stock an additional pop over the next few months. Yes, solar isn’t as hot as it was last summer, but a correction was needed and solar is far from dead.
What I like most about Gaiam (GAIA) is that in addition to its investments in solar, it’s a green retailer pure play and well diversified. The company sells yoga supplies, wellness instructional media, exercise equipment, eco friendly home and outdoor supplies and is even building a growing community health conscious, green and spiritual individuals. You have to see this – they even offer a hooded fleece made out of recycled pop bottles. Oh yeah, ..and the company is growing and growing quickly with earnings rising more than 40% last year and expected to rise another 50% here in 2008. With just 2 analysts covering the company right now, GAIA remains relatively off of Wall St radar, but not for long.
People have been trying to call a top in the solar energy stocks for months now but the good news just keeps on coming in this sector and it remains white hot.. Now I’m in no way recommending initiating aggressive positions in the leading solar stocks at this point. It’s more a situation of a short term trade over the next few weeks or a hold if you’ve been the names for awhile. These stocks are far too extended for large positions.
Leading solar stocks such as First Solar (FSLR), JA Solar (JASO), Suntech Power (STP), MEMC Materials (WFR) and Solarfun Power Holdings (SOLF) aren’t showing any technical deterioration despite massive runs but at some point the music will stop and you better find a chair. With that disclaimer out of the way I’d like to highlight a Solar Trade of the Day.
Despite an amazing run that saw Solarfun (SOLF) nearly triple in just one week, the stock is breaking out of a bullish pennant formation and looks poised for more. Volume wasn’t great today, so it could pull back a bit offering a better entry. New support is just above 26.
Disclaimer: I own a position in SOLF