A Repeat of Yesterday and Solar Power Gets into the Game

Financials advanced strongly while commodity plays got crushed.  CIBC closed up 5.27% and is up 30% from its lows just a week ago. Barrick Gold was down almost 8% on the day just to give you the magnitude of the change in investor sentiment.

Sector rotation seems to be taking shape as everyone gets on the bandwagon. Daily moves of this magnitude are hard to fathom and it makes me quite uncomfortable to see positive or negative swings like this as irrationality on both sides are taking place.

Investors who made money early in the year being over-exposed to oil, gas, and commodities are giving it back while those who hung on through the pain with their banks and financials are seeing their portfolios grow again. Very few have been able to call the trends perfectly which makes the case for fundamental indexing that I talked about previously quite attractive.

I had an opportuntity to listen to Kevin McLean on conference call today. Kevin is the portfolio manager of the Sentry Precious Metals Fund which has had excellent long-term returns. He is very bullish on gold and bullish on copper. Negative on almost all other base metals. He figures that there may be only one more opportunity to buy gold with an 8 at the front of the price before it begins its trajectory higher.

Which leads to my last comments of the day inspired by the University Solar Powered Car Race that started in Texas and ended at the University of Calgary yesterday which was won by the Univeristy of Michigan.

Xantrex Technology (XTX) announced it was in discussions to be bought although the buyer and price are unknown.  Xantrex is a leading developer, manufacturer and marketer of advanced power electronic products. The company is focused on the fastest growing segments of the power electronics market – renewable, programmable, portable and mobile power.

The stock is cheap in the space that it is in. It closed at $12.61 today, up almost 19%. National Bank has a $14.00 target on it but could reach $19.00 if priced at the same multiple as some of its competitiors. Many of you are probably thinking that it is a great place to invest going forward. While P/E ratios are high for the industry at about 40, they are trading at about 22 times this years estimate and 15 times next years estimates which are not unreasonable.

 

What are your thoughts? Will Solar power take over from oil and traditional electricity? Your comments are more than welcome.

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