Tuesday, July 12, 2011

Water: The Ultimate Commodity

The Palisades Water Index is an unmanaged benchmark that many water indexes and ETFs track. Why the interest in water? Like gold and oil, water is a commodity - and it happens to be rather scarce.

Global Water Resources
About 70% of the earth's surface is covered in water, but 97% of it is saltwater, which is unfit for human use. Saltwater cannot be used for drinking, crop irrigation or most industrial uses. Of the remaining 3% of the world's water resources, only about 1% is readily available for human consumption.

Global Shortage
Rapid industrialization and increasing agricultural use have contributed to worldwide water shortages. Areas that have experienced water shortages include China, Egypt, India, Israel, Pakistan, Mexico, parts of Africa and the United States (Colorado, California, Las Vegas and the East Coast), to name but a few.

Pollution also highlights the need for clean water. In the U.S., the dead zone off the Gulf Coast highlights the impact of fertilizer runoff, and methyl tertiary butyl ether (MTBE), an additive in unleaded gasoline, can be found in well water from California to Maryland. Overseas, highly publicized incidents in Russia, China and elsewhere demonstrate that pollution isn't limited to the West. Of course, fouled water supplies further limit the amount of fresh water available for human use.

Like any other scarcity, the water shortage creates investment opportunities. Here are some of the more popular indexes designed to track various water-related investment opportunities:

  • Palisades Water Index - This index was designed to track the performance of companies involved in the global water industry, including pump and filter manufacturers, water utilities and irrigation equipment manufacturers. The index was set at 1000 as of December 31, 2003. It closed at 1351.08 on December 30, 2005.

  • Dow Jones U.S. Water Index - Composed of approximately 23 stocks, this barometer climbed from 500 to 800 over the 12 months ending December 31, 2005.

  • ISE-B&S Water Index - Launched in January 2006, this index represents water distribution, water filtration, flow technology and other companies that specialize in water-related solutions. It contains 20 stocks.

  • S&P 1500 Water Utilities Index - A sub-sector of the Standard & Poor's 1500 Utilities Index, this index is composed of just two companies, American States Water (NYSE:AWR) and Aqua America (NYSE: WTR). In 2005, the S&P 1500 Water Utilities Index rose in excess of 45% .

The Bloomberg World Water Index and the


John Williams Exclusive – US Dollar Selling & Hyperinflation

With so many questions surrounding the U.S. dollar and rising inflation, today King World News interviewed internationally followed John Williams of Shadowstats to get his take on the U.S. dollar, Fed and hyperinflation. When asked about the current fiscal crisis the United States faces Williams stated, “Well, very simply I have very little respect for a political system that goes to the brink each time the debt has to be raised. They have to raise the debt ceiling because the government already is obligated to spend the money beyond what it can raise in taxes. I would be very surprised if the US actually defaults.

What they are doing now is the type of thing that has happened a number of times before, although there seems to be more of a serious challenge this time around and risk of an outright default on the US debt. This would be disastrous for the financial system. Indeed it likely would trigger very heavy selling of the US dollar, which would accelerate the inflation process and move us towards the hyperinflation scenario….


Real Unemployment Rises to 16.2% in June -- 25.3 Million People

(CNSNews.com) – The real unemployment rate rose to 16.2 percent in June, the Bureau of Labor Statistics (BLS) reported on Friday, marking a return to levels not seen since January 2011.

The “real” unemployment rate is technically a combination of three measures of unemployment: the unemployment rate, the number of people working part-time who want full-time work, and the number of people “marginally attached” to the workforce.

Those who have left the workforce but would still like to be employed are considered marginally attached.

This figure is considered a more complete measure of unemployment because it captures a broader spectrum of those affected by the weak economy. Merely counting those who apply for unemployment benefits as “unemployed” does not fully account for everyone who is out of work or underemployed.

This real unemployment rate – known as the U6 rate – has been climbing since February 2011 when it was at 15.9 percent. Real unemployment peaked in October of 2009 at 17.4 percent, before falling into the 16 percent range for much of 2010.

It now appears that the real unemployment rate is returning to its 2010 levels, trending upward after staying slightly below 16 percent from February to May.

The total number of people who were truly unemployed in June was 25.3 million -- the 14.1 million who were unemployed, the 2.7 million who were marginally attached to the workforce and the 8.6 million who were underemployed.

Three Safe Sectors For The Summer: BAX, CL, FEZ, GII, IDU, MO, MRK, VDC, VOO, XLP, XLV

With ballooning federal budget deficits here at home, bailout after bailout in the Eurozone and roaring inflation continuing to persist in many of the emerging markets, it's no wonder investors are on edge. These problems, compounded with slowing global economic growth, have caused the markets to steadily trend downward since June. As the immediate-term economic outlook is poor, many investors are in a quandary about what to do. As we enter the "dog days" of summer and more bad news is on the horizon, investors may want to tilt their portfolios toward a defensive posture.

Trouble Brewing
Overall, the news keeps getting worse for the global economy. Greece's inability to pay back its debt has once again made front-page news. As the credit upheaval spreads from Greece, analysts estimate a significant risk of Spain and Italy being "engulfed by the crisis". The PIIGS nations will require constant handholding and will be a major drag on European growth. Funds like theSPDR EURO STOXX 50 (NYSE:FEZ) continue to fall. In the emerging world, food continues to be a major issue. As food prices maintain their upward trend, the potential to unhinge the developing world's strong prospects continues to grow. This doesn't even take into account the potential housing bubbles brewing in places like Hong Kong and China.

In the U.S., the economy is appearing to slow down. June's unemployment rate rose to 9.2% from 9.1%, as hiring crawled to a near standstill last month. This lack of jobs is having a dramatic effect on consumer confidence. For the month of May, the index dropped by 5.2 points, reaching a six-month low. The housing market remains strained, and the threat of a Debt Ceiling default continues to rise every day. Overall, earnings for a variety of companies have fallen in the last quarter due to the slowing economy.

Defense is the Best Offense
With all the headwinds facing the global economy, it's no wonder the major stock indexes have trended downward over the last few weeks. The Vanguard S&P 500 ETF(NYSE:VOO) seems to shudder every time there's more bad news. While a new recessionmay or may not be in the cards, it could be time for investors to break out the recession handbook. By seeking shelter in those sectors that tend to do well in constrained environments, investors could avoid some of the worst effects of the summer downturn. Here are a few ways to do just that. (To help you recession-proof your portfolio, read 4 Characteristics Of Recession-Proof Companies.)

Consumer Staples
With the return of volatility, investors may want to look toward their pantries and medicine cabinets for stocks. After all, the companies that produce food, toilet paper and soap may not be exciting, but they tend to be very predictable and normally generate positive free cash flows. Their non-cyclical nature makes them perfect additions for a portfolio looking for shelter. The Consumer Staples Select Sector SPDR (NYSE:XLP) is still the most liquid way to gain access to this sector. However, the Vanguard Consumer Staples ETF(NYSE:VDC) may be a better choice, offering more exposure to product producers than retailers. The fund follows 111 different companies including Altria Group (NYSE:MO) andColgate-Palmolive (NYSE:CL). The ETF yields 2.39%.

Like consumer staples, the utility sector offers the right combination of safety and dividends that investors are looking for to get them through the current turmoil. Even in times of duress, people need to heat and cool their homes. They need the water and electricity flowing. Both the iShares Dow Jones U.S. Utilities (NYSE:IDU) and utility-heavy SPDR FTSE/Macquarie Global Infrastructure 100 (NYSE:GII) offer yields in excess of 3.5%.

As one of the few sectors of the U.S. economy that has seen constant growth, the sector may be one of the better choices to play the turmoil. Healthcare is one of the only sectors to see continued jobs growth over the last 10 years. The Health Care Select Sector SPDR (NYSE:XLV) follows some of the largest healthcare names such as Merck(NYSE:MRK) and Baxter (NYSE:BAX).

Bottom Line
With uncertainty beginning to creep back into the markets, investors may want to take a defensive posture. The three sectors of healthcare, consumer staples and utilities make ideal places to hide from the storm.

The Disappearing Black Middle Class

Princeton Professor Cornel West (center) eagerly shakes the hand of President Barack Obama in June 2010. Today, West calls Obama “a black mascot of Wall Street oligarchs.” | Pablo Martinez Monsivais~AP

Millions of Americans endured financial calamities in the recession. But for many in the black community, job loss has knocked them out of the middle class and back into poverty. And some experts warn of a historic reversal of hard-won economic gains that took black people decades to achieve.

“History is going to say the black middle class was decimated” over the past few years, said Maya Wiley, director of the Center for Social Inclusion. “But we’re not done writing history.”

Adds Algernon Austin, director of the Economic Policy Institute’s Program on Race, Ethnicity and the Economy: “The recession is not over for black folks.”

In 2004, the median net worth of white households was $134,280, compared with $13,450 for black households, according to an analysis of Federal Reserve data by the Economic Policy Institute. By 2009, the median net worth for white households had fallen 24 percent to $97,860; the median net worth for black households had fallen 83 percent to $2,170, according to the institute.

Austin described the wealth gap this way: “In 2009, for every dollar of wealth the average white household had, black households only had two cents.”

Austin thinks more black people than ever before could fall out of the middle class because the unemployment rate for college-educated blacks recently peaked and blacks are overrepresented in state and local government jobs. Those are jobs that are being eliminated because of massive budget shortfalls.

Since the end of the recession, which lasted from 2007 to 2009, the overall unemployment rate has fallen from 9.4 to 9.1 percent, while the black unemployment rate has risen from 14.7 to 16.2 percent, according to the Department of Labor. Last April, black male unemployment hit the highest rate since the government began keeping track in 1972. Only 56.9 percent of black men over 20 were working, compared with 68.1 percent of white men.

Even college-educated blacks fared worse than their white counterparts in the recession. In 2007, unemployment for college-educated whites was 1.8 percent; for college-educated blacks it was 2.7 percent. Now, the college-educated unemployment rate is 3.9 percent for whites and 7 percent for blacks.

Nearly 8 percent of African Americans who bought homes from 2005 to 2008 have lost them to foreclosure, compared with 4.5 percent of whites, according to an estimate by the Center for Responsible Lending.

Some see a bitter irony in soaring black unemployment and the decline of the black middle class on the watch of the first black president.

“I thought Barack Obama could have provided some way out. But he lacks backbone,” Princeton Professor Cornel West told truthdig.com recently.

West said Obama sold out the poor to become “a black mascot of Wall Street oligarchs and a black puppet of corporate plutocrats. . . . I don’t think in good conscience I could tell anybody to vote for Obama.”

Wiley said Obama should be applauded for several initiatives that have helped the black middle class, such as programs to modify certain mortgages and prevent foreclosure because of job loss. But she would like Obama to aggressively counter the suggestion that first black president would be showing favoritism if he specifically helped black people.

“It’s the right thing to do for the nation,” she said. “Black people are a huge segment of the population, they’re especially hard-hit, and the country cannot recover if the black community — as well as the white community and others — does not recover.”

Need a Stock Tip? Review the U.S. Financials (BAC, JPM, WFC)

With today's pullback, you can chase the recent 52-week high stocks that have pulled back like NetFlix (NASDAQ:NFLX) or look to U.S. Bank stocks that are trading "very cheap". That includes Bank of America (NYSE:BAC) shares which hit a new 52-week low today and are trading in the $10.30 range.
If you don't like BofA there are plenty more to choose from including JP Morgan Chase (NYSE:JPM) or Wells Fargo (NYSE:WFC).

Can Bank Stocks Fall Any More?
The market is tanking thanks to bad news out of Europe (for the 3,632nd time), and the bank stocks are among the worst performers.
Citigroup shares are down 3.8% this morning. J.P. Morgan stock is off 3.2%. Bank of America is sliding 3.1%. Wells Fargo is down 2.6%. Remember all those wrong (or early?) calls earlier this year that bank stocks were “cheap?” Well, those bank stocks just keep getting cheaper.
It’s almost hard to imagine bank stocks have much more to fall.
The second quarter earnings season is about to start this week, and investors are basically writing off the entire quarter and crossing their fingers for a better back half of the year. Analysts — no doubt with a few careful whispers from the big banks — have been hacking down their earnings estimates for the quarter.
The question is whether the ugly second quarter is going to come in below the lowered bar of expectations. If that happens, will it be a mass investor exodus, or a shrug and more cries to buy “cheap” financial stocks?

The Big Banks Are Waging Warfare Against the People of the World

Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.

Hudson says:
  • The European debt crisis is really financial warfare by the banks
  • Indeed, the banks are in warfare against the rest of society

In a separate interview, Hudson says:
  • What's going on in Greece is exactly what's going to happen in America in a couple of weeks.
  • The big banks are forcing their bad debts on government
  • They are also forcing governments to sell off national assets so the banks can install a "neo-feudalism":

As I documented last month in a post entitled "America Is Being Raped ... Just Like Greece and Other Countries", America is in fact being subjected to the same type of plundering as Greece and Ireland.

Professor Hudson explained in 2008:
You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.
I reported last year:
Foreign Policy magazine ran an article entitled "The Next Big Thing: Neomedievalism", arguing that the power of nations is declining, and being replaced by corporations, wealthy individuals, the sovereign wealth funds of monarchs, and city-regions.
As I noted in 2009, a leading progressive economist that the true purpose of the bank rescue plans is "a massive redistribution of wealth to the bank shareholders and their top executives".

As the wholly non-partisan Australian economist Steve Keen notes:
  • "This is the biggest transfer of wealth in history", as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people
  • The big banks blew bubbles - using fraud - because that's the only way they could make obscene profits (see this for for details)

Indeed, this isn't the "Great Recession", it's the Great Bank Robbery. The big banks have pillaged andlooted the rest of the world.

And it is not only Greece which is losing its sovereignty ... the big banks have turned America into a banana republic as well. Remember, the trillions in bailouts went to banks, not Main Street ... and a large percentage of the bailouts went to foreign banks (and see this). And so did most of money from the second round of quantitative easing.

Indeed, the warfare by the big banks is global.

Postscript: If this sounds like breathless class warfare against the financial sector, remember:
  • The father of modern economics - Adam Smith - didn't believe that inequality should be a taboo subject
  • Warren Buffet, one of America's most successful capitalists and defenders of capitalism, points out:
There's class warfare, all right, but it's my class, the rich class, that's making war ....
  • Conservatives - as well as liberals - are against rampant inequality. But all Americans underestimate the amount of inequality in our country

10 Ways to Dig Yourself Out of Credit Card Debt

Many Americans have struggled with the burden of credit card debt at one time or another. And getting out of the red and into the black can often seem overwhelming.

If this is any consolation, you're not alone. Credit card debt affects nearly one-third of Americans. At the end of 2010, the average consumer in the U.S. owed $4,200 to credit card companies.

While that number is down slightly from years past, it remains startlingly high. If you are one the millions of Americans burdened by credit cards, here are 10 ways to help you dig yourself out of trouble.

1. Stop Using Your Cards

The first step in ridding yourself of credit card debt is to stop adding to your balance. Credit cards are convenient, but if each purchase is increasing your charged interest, the card isn't worth it. It will be difficult at first, but switching to an all-cash system will help you stay within your monthly budget. Spending with cash is another way to become aware of what you spend so that you can waste less and apply more toward quickly minimizing the balance.

2. Track Spending

Behavioral studies have shown that individuals who keep a record of every purchase spend less money. You can do this electronically or with the old-fashioned pen and paper. Of course, it's best to do it with a written budget, but even with no budget in place, just becoming aware of what you spend through tracking has been proven to positively affect your bottom line. Review your results weekly to see if your spending is on track with your goals.

[InvestingAnswers Feature: 8 Step to Creating a Smart Financial Plan]

3. Prioritize Your Debt

Not all debt is created equal. If you have two credit cards and one has a 6.5% interest rate and another has 12%, the long-term cost of the loans will be different. By shifting resources from the lower-interest card to the card with higher interest means a lower total payment.

Some financial experts recommend the "debt snowball" technique, which involves starting with paying the smallest debt first. The idea is that eliminating the lowest balance will create positive momentum. Plus, the minimum payment of the recently cleared debt can then be applied to the balance of the next in line.

4. Get a Game Plan

Paying credit card debt can seem like endlessly throwing cash into a black hole. A great way to take charge is to determine the maximum amount you can pay and how many months it will take you to become debt-free. Having a plan will help you reach your goals faster, and having a "debt-free date" can keep you on track when times get tough.

[InvestingAnswers Feature: 7 Steps to Perfect Credit]

5. Reduce Expenses

It might sound obvious, but it is essential to live within your means in order rid yourself of credit card debt. If you haven't already, take a good look at where your money goes every month and cut out all non-essential expenses. Eating out is one common area where funds can drain your monthly budget. Overspending at the grocery store, impulse buys on the weekends and daily lattes are other areas where the fat can often be trimmed.

6. Consolidate Balances

If you have balances on multiple credit cards, it could be in your best interest to consolidate them.Consolidation involves transferring the money owed on one card to one that has a lower interest rate. This move can simplify the repayment process and could save you hundreds of dollars in interest payments. Keep in mind that balance transfers often involve a fee of $250 or more -- so be sure the long-run savings outweigh the hit you'll take in transfer fees.

7. Drain Your Savings Account

Saving money is important, but the interest earned from a savings account pales in comparison to the interest you're paying on a credit card. For example, if you have $1,000 in a CD earning 2% (or less) and $1,000 owed to a credit card with 18% interest, any earnings from your savings account will be lost to the higher interest of the credit card. The better solution is to reduce the amount owed on a credit card by liquidating a savings account. Then after the debt is paid off, you can begin to build back your savings. Throwing all available resources onto your debt will help you become debt-free that much faster.

8. Sell Your Stuff

If you're like most people, you have plenty of stuff around your house that you never use. Hosting a garage sale or posting items on Craigslist can help you free up closet space and make money to put toward your credit card bills. There are also a number of new websites that offer swapping services [www.thredup.com/]. While you won't make anything by selling your items, you can trade goods you don't need for those you do -- say, baby clothes for toddler clothes -- and save yourself any new expense.

9. Get a Second Job

There are basically two ways to get your finances back in order: by reducing expenses or increasing income (or both). A part-time job is a surefire way way to increase your monthly income and an effective means for eliminating debt -- as long as you're adamant about using the extra income only for that purpose Whether its waiting tables, baby sitting, freelance writing or filling out online surveys, find a way to increase the money you bring in each month and pay it straight to your debt.

10. Negotiate with Creditors

Negotiating with credit-card companies isn't the optimal solution, but depending on your situation, it could offer a viable resolution. It provides the opportunity to pay a lump sum to clear the debt, which is often less than the amount owed, or lowering your payments for a few months while you get your head above water. Just remember, a lump-sum settlement can severely penalize your credit score (it's ultimately considered a default), so be sure you're clear on the implications before you agree to the terms.

The Investing Answer: Credit card debt can be a mental weight that keeps you feeling defeated and overwhelmed. As you begin to shed these obligations, you'll find that with every card paid off, a burden is lifted off your shoulders. It's not an impossible task, and with a solid game plan and small behavioral changes, you can achieve your financial goals.

Dollar Could Send Stocks and Commodities Higher

It’s been an exciting couple months as stocks and commodities have moved like they are a roller coaster at a theme park. We all know every good roller coaster has a few monster hills which make their clients scream in fear/excitement that’s what it’s all about!

But if we step back into the financial world where fear/excitement cost people month it is not so fun. Look at the US Dollar index you will see three monster hills which investors/traders have just finished riding. These quick price movements were enough to make most traders hit the sell button in fear of wilder price action. This is the type of price action which can whip-saw traders in and out of positions for several back-to-back losses.

Having multiple losing trades back-to-back triggers a series of events causing most traders to lose large percentages of their trading capital.

First the trader starts to become frustrated and starts second guessing themselves. This causes revenge trading meaning they start to trade more frequently without proper setups and risk reward levels. Which lowers their confidence, while increasing the rate of their trading. This generally makes for a blowout trading session or week. Meaning they lose 20-50+% of their trading capital in a very short period of time all because they are trading off pure emotions and not clear trading rules.

Avoiding roller coaster rides with your trading capital/emotions is one of the things I do well. I do this by focusing on the US Dollar index because it plays a very large roll in what both stocks and commodities do. I analyze the dollar trends and use its price action to help gauge how big and long its next trend is. If the dollar index looks as though it may top, then I will be looking to buy/ accumulate some stocks and commodities simply because a falling dollar helps boost the value of stocks and commodities.

Take a look at the dollar index below. Just a quick glance and you get a gut feeling that it’s trying to top and could have another sharp sell off in the next 1-3 days.

Now if we take a look at the SP500 daily chart and use the dollar index analysis above, I would expect to see stock prices pause or pullback for a few days while the dollar tops and then look for a reversal pattern on the shorter time frame charts to add more to our position before stocks continues higher.

Looking at the price of gold we can see that it has been trading in a large sideways range since May and also near a resistance trend line (red line). We could easily see a 1-3 day pause/pullback in gold while it builds energy for another surge higher. Which could take it through the resistance level.

Pre-Week Market Trend Analysis:
In short, I feel the dollar is trying to put in a top which could take a few days to play out. If that unfolds then we should start seeing stocks pullback to support levels and then bounce with rising volume.

Chris Vermeulen

Very Cheap Solar Stocks: ASYS, CSIQ, FSLR, JASO, KWT, LDK, SOL, TAN, WFR, YGE

Headwinds have beaten down stocks in the solar space. Solar ETFs Market Vectors Solar Energy (NYSE:KWT) and Guggenheim/Mac Global Solar Energy Index(NYSE:TAN) are down 9.5% and 7.4%, respectively. Meanwhile, the S&P 500 has rallied nearly 5%. Investors may be able to catch a strong solar wind with several sun stocks with valuations now extremely cheap.

Sun Stock Sell-off
Solar companies design, supply, manufacture and sell devices (i.e. solar panels) that convert sunlight into electricity via the photovoltaic effect and heat engines. Companies based in the United States, China, Germany and Japan are the leading producers of solar panels used to harvest sun energy.

Until recently, the solar group has been under pressure from several elements, leading to a sustained cooldown in the solar space. The chief limiting factor working against solar is that sunlight is needed for solar panels to generate electricity. This means sunlight is an intermittent source of energy; solar panels can't generate electricity at night or under dense cloud cover. In addition, the solar industry is not autonomous yet, necessitating subsidies to compete as a cost-effective energy source. Cutbacks to feed-in tariffs across Europe have priced down solar shares dramatically. These fundamental problems, coupled with falling solar panel prices squeezing margins, have led to a sustained retracement. Take a look at a few solar stocks getting crushed this year:

  • LDK Solar (NYSE:LDK) down 34%
  • Canadian Solar (Nasdaq:CSIQ) down 18%
  • JA Solar Holdings (Nasdaq:JASO) down 32%
  • ReneSola (NYSE:SOL) down 45%

Even high petroleum prices (a driver for green energy stocks) and an added solar safety premium following the Fukushima meltdown haven't stopped short sellers.

Sunny Valuations
It's time to go bottom fishing. The dramatic sell-off has made solar stocks extremely cheap, as there remains a great underlying investment story. Solar is an abundant, safe source of energy. Even though the industry is still about a year away from parity against other alternative energy sources, new technologies keep pushing that cost lower. Polysilicon and wafer costs have come down recently.

As solar increasingly becomes more cost competitive, integrated suppliers that have seen their valuation adjust become ever more attractive. One such company is China-basedYingli Green Energy (NYSE:YGE), down 20% year-to-date. Amtech Systems(Nasdaq:ASYS), which makes furnace equipment to produce solar cells, is another interesting name. MEMC Electronic Materials (NYSE:WFR), down 30% year-to-date, is a high-beta play on its new solar wafer technology.

A more conservative way to add solar to your portfolio is Tempe, Arizona-based First Solar(Nasdaq:FSLR). Shares of First Solar have not corrected like other names in the group. First Solar's price stabilization reflects a strong balance sheet and market leadership. Last month, the solar-panel producer scored the largest federal investment into a solar company from the Department of Energy - a $680 million conditional loan guarantee for its Antelope Valley Solar Ranch 1 project, plus partial loans for Topaz Solar and Desert Sunlight projects.

First Solar is well positioned to grow cash flow through an expanding global footprint. If demand remains strong in Asia and Europe and pricing stabilizes - as a recent report from ICIS suggests - First Solar is poised to lead the group higher. Currently trading near $132 per share, First Solar has plenty of room to rise toward the 52-week high of $175.45. Applying a cash flow growth rate of 4% for the rest of 2011, a price target of $152 is achievable.

The Bottom Line
Valuation is just one of several reasons to bask in the solar group now. Lower solar panel prices do squeeze margins, but they also spur demand. First Solar is a low-cost provider able to capture that demand and lead sun stocks out of the June trough