What will be the hot sector in 2008?

[Lucas Scott]

The solar power sector seems to have been the hottest sector of 2007. What will be the hot sector(s) in 2008? Anyone venture a guess?

[Lucas Scott]

No one bold enough to guess? Are we mice or are we men?

I'll take a stab at it and guess one sector will be stem cell stocks such as ASTM, GERN, STEM, etc. With the election year, the 'federal funding for stem cell research' debate could heat up. Stocks in this sector are near the low end of multi-year trading ranges so there's room to rally.

[AussieTrader]

The sun is not setting on Solar stocks...........................

[BigSully1]

The sun is not setting on Solar stocks...........................

Some Solar Stocks Expected To Remain Hot
Wednesday January 2, 6:07 pm ET
Brian Womack


Many solar company shares shot skyward in 2007, making them among the hottest stocks .
IBD's Energy-Other group, heavy with solar companies, currently ranks No. 1 of the 197 industry groups tracked. The 75-company group is up 70% since mid-August. Rankings are based on stocks' price performance in the last six months.

ADVERTISEMENT


All nine of the top-rated companies in the group are solar-related, and IBD gives all of them a Relative Strength Rating of 99, the highest possible. The RS is based on price performance in the past 12 months.

"The solar sector has done extremely well," said Brion Tanous, an analyst with Merriman Curhan Ford. "It's seeing tremendous growth."

Analysts question whether the group can keep up this pace in 2008. There's much room for growth, but solar companies must continue to depend on government incentives. Old energy sources are still cheaper.

Stock prices have been volatile. It's not uncommon to see stocks in this sector surge, or fall, by 10% or more in one day.

Solar-product makers First Solar (NasdaqGS:FSLR - News), SunPower (NasdaqGS:SPWR - News) and Suntech Power Holdings (NYSE:STP - News) have emerged as sector heavyweights. All have U.S. market capitalizations that top $10 billion. That's more than such household names as bookseller Barnes & Noble (NYSE:BKS - News) and battery maker Energizer Holdings (NYSE:ENR - News).

The high valuations have helped attract mutual funds and other institutional buyers to the solar game in the past three to six months, analysts say. Many funds only invest when companies hit market caps of $5 billion or $10 billion and daily trading volume of 1 million or more.

Besides, many solar companies are in the black and growing earnings.

Solar stocks also enjoy the unique position of being a pure-play investment for clean-energy companies in the U.S. Unlike Europe, wind energy and other green investments are harder to find on the U.S. markets. General Electric (NYSE:GE - News), for example, is one of the largest makers of wind turbines, but that unit makes up less than 15% of GE's total sales.

"There are more investment dollars ... chasing clean energy," said Michael Carboy, an analyst with Signal Hill Capital. "Green energy and cleantech really is an enduring investment theme."

Photovoltaic solar products take the energy of the sun and convert it into electricity. Groups from homeowners to utilities use the technology. Solar industry sales are expected to jump to $69.3 billion in 2016 from $15.6 billion in 2006, says analyst Tanous.

The industry is scrambling to improve its technologies so that it can cut its power costs by half by early next decade. That would put it near the price of traditional electricity and free it from the need for government incentives.

In the meantime, solar demand is strong in many places, especially where incentives have been heavy, including Germany and Spain. Italy, Greece and parts of Asia also have been stoking demand.

The U.S. expansion has been led by California's aggressive solar program. Additionally, the federal government has been giving some tax credits to solar projects. The tax credits run out at the end of 2008, but Congress might extend them.

Rhone Resch, president of the Solar Energy Industries Association, says solar energy's installed capacity rose by 70% in 2007 in the U.S. He sees it rising another 50% to 80% in 2008.

"2007 was really the year of solar energy in the United States," Resch said.

Still, the prospect of government incentives beyond the near term is iffy, says Colin Rusch, an analyst at Broadpoint 19ecurities.

"To predict the market past 18 months is very difficult," he said.

One thing is certain: The industry is facing shortages of the key material used to make solar cells, a type of silicon called polysilicon. Some analysts don't see the shortage working itself out until 2009 or later.

Polysilicon prices have risen to around $400 per kilogram from roughly $35 per kilogram earlier this decade, says Mark Bachman, an analyst at Pacific Crest Securities. He says prices should fall to less than $100 at some point.

The situation has companies working to land long-term supply contracts, analysts say. Companies with close ties to suppliers, such as JA Solar (NasdaqGM:JASO - News) and Yingli Green Energy Holding (NYSE:YGE - News), have seen big stock moves because they might be able to ramp up production faster than others.

The supply shortage has helped suppliers of the material, including investor favorite MEMC Electronic Materials (NYSE:WFR - News). Its stock more than doubled in 2007.

Some companies say investors should look beyond any possible supply shortages. First Solar, which saw its stock rise by more than 700% in 2007, has gained attention by avoiding the shortages. The company uses little or no silicon to make its cells.

First Solar has also managed to ramp up production faster than expected -- and is finding new ways to improve the efficiency of its solar technology.

"They had a lot of things go right for them this year," Rusch said. "They were able to get efficiency gains."

Another favorite is SunPower.

It uses less polysilicon than others, according to analysts. It also boasts some of the most efficient solar cells in the industry -- meaning it gets the most electricity from its solar cells.

[Lucas Scott]

I respectfully disagree gentlemen, I think solar stocks have had their time in the sun  Article that is more in line with my viewpoint on solar:

http://www.fool.com/investing/value/2008/01/03/avoid-these-awful-stocks-in-2008.aspx

I think you could go short FSLR at $280 and bag a nice return. Even if it were to run up another $100, if you held through the pain I believe you'd be in the black by year end. I predict $120 by year end for FSLR. Its 2008 PE is 133 right now for cryin' out loud. The pps tripled in the last 4 months. I don't believe the company is 3x more valuable now than it was in August. Maybe I'll put my money where my mouth is - not sure if there are shares available to short though. 

[BigSully1]

 These Chinese sectors could be good. Still thinking about what THE sector might be.

By Annie Sun

Shanghai. January 8. INTERFAX-CHINA - The Data Center of the China Internet (DCCI) yesterday released its 2008 China Internet Survey, forecasting growth in China's portal, online video, online travel, online community and online games industries.

The report said competition among market leaders would intensify, with market reshuffles set to take place. It also said business models will diversify, with more cross-sector cooperation taking place in 2008.   

Chinese portals   

According to the report, total revenue of Chinese portals hit RMB 12.35 billion ($1.7 billion) in 2007, up 22.3 percent year-on-year. Sina, Sohu, NetEase and Tencent together contributed 76 percent to this figure, remaining as the four pillars of the sector. DCCI forecast that total revenue for the sector will reach RMB 16.19 billion ($2.2 billion) in 2008 and RMB 21.33 billion ($2.93 billion) in 2009.   

The report said that 27.2 percent of the total revenues of Chinese portals came from online advertising in 2007, climbing 25.6 percent from 2006. Sina and Sohu generated their revenues mainly through online advertising, while NetEase and Tencent generated revenue mainly from non-advertising areas. DCCI said online advertising will account for a larger portion of the revenues of Chinese portals in 2008.   

Chinese portals are also gradually shifting from merely being information providers to being online service providers through the introduction of more interactive content such as video sharing, blogging and online communities. These interactive activities have helped portals to increase Web traffic and build their brand names, said the report, which is set to continue through 2008.


Video Web sites   

Revenue of China's video Web sites reached RMB 90 million ($12.4 million) in 2007, lifting 125 percent year-on-year, despite the fact that many online video Web sites have yet to turn a profit. The sector's revenue is expected to increase to RMB 160 million ($7.28 million) in 2008 and RMB 290 million ($39.8 million) in 2009.   

In 2008, the sector's revenue will be driven by online video advertising. But the report also said that policy will be the strongest factor in terms of influencing the market in 2008, which may affect investment and the revenue model of video Web sites.   

Companies that have not secured funds may be forced to retreat from the market due to the sector's high operating costs and intensifying competition. Pressure on existing video Web sites will also increase in 2008 as TV stations and film companies move into the sector. These companies have the advantage of owning large numbers of programs and content from broadcasting. 


Online travel and hotel reservation services 

Revenue of China's online travel and hotel reservation services climbed 65.4 percent year-on-year to RMB 2.25 billion ($309.1 million). Revenue of the sector is expected to hit RMB 3.84 billion ($527.5 million) in 2008 and RMB 7.32 billion ($1 billion) in 2009, driven by the Olympics and the further opening of China's tourism market.   

Ctrip remains the leader in China's online travel and hotel reservation market, followed by Elong, Auyou and MangoCity.   

In 2008, online travel and hotel reservation companies will expand their business to off-line services, said the report. It is highly possible that they will establish their own off-line travel agencies, with their strong online client bases. Competition between this new generation of travel agencies and traditional ones will intensify.   

The report also said that full travel package services will replace hotel reservations to become the major business for online travel. The report said hotel reservation providers are already experiencing increased demand from Chinese travelers for personalized tours, in which they can choose their own itineraries. New services such as cruise vacation travel packages will also emerge as hot trends. 


Online communities   

Revenue from China's online communities reached RMB 550 million ($75.5 million) in 2007, up 31 percent year-on-year. Revenue for this market will increase to RMB 750 million ($103 million) in 2008 and RMB 980 million ($134.6 million) in 2009,  according to DCCI.


The integration of e-commerce and online communities will be an important trend in 2008. The large number of Internet users grouped together in online communities will be a valuable resource for e-commerce. According to the report, online information creditability is the key for the integration. The report also said it is hard to generate profit in a short time for this integrated business model and long-term development is needed.   

In addition, functions of online communities may focus more on specific areas such as technology and education services to attract a specific group of users.



Online games 

The number of Chinese online gamers reached 48 million in 2007, up 17.1 percent from 2006, due to the increase in the number of online casual games and the number of gamers in second and third tier cities. DCCI forecast that the number of Chinese online gamers will hit 59 million in 2008 and 70 million in 2009.   

Revenue for China's online gaming industry reached RMB 9.36 billion ($1.29 billion) in 2007, up 57 percent on an annual basis. Revenue for the industry is expected to hit RMB 13.02 billion ($1.79 billion) in 2008 and RMB 17.03 billion ($2.3 billion) in 2009. Role-playing games contributed 78.4 percent of China's total online game revenue in 2007.   

Shanda, NetEase and Giant Interactive ranked as the top three companies in terms of revenue. The9 ranked third in 2006 but was replaced by Giant Interactive in 2007. Second-tier online game companies also developed quickly in 2007 such as Perfect World, Kingsoft and NetDragon, all of which listed in the past year and expanded quickly with the funds they raised from the stock market.   

According to DCCI, homegrown Chinese games will be the main revenue generators in the future and casual games will attract more users due to quick game updates and government support.   

Meanwhile, game companies will expand their markets to second and third tier cities as the top tier cities gradually become saturated.