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Solar Stocks Look Up — So Do Deepwater Drillers

Sun shines on solar stocks again, but don't be snookered. The predictable rally in "alternative" energy stocks has begun, with the president sure to push them in his speech tonight.

You'd think this would be an ideal time for solar: proven technology, clean, demand continues to rise, and they generate only 0.2 percent of global power generation...talk about room for growth!

So why aren't traders excited? Because:

1) barriers to entry are low;

2) capacity is high; and

3) solar stocks got huge tax breaks, particularly in Europe, which are now being reduced. Sixty percent of global solar demand is tied to the Euro Zone, according to CLSA.

The only good news: solar stocks are a lot cheaper than they were a couple years ago. In mid-2008 most solar stocks were trading at 20 to 30 times earnings; today, many are trading at 10 times earnings.

Still interested? Check out the Claymore MAC Global Solar Energy ETF , which is largely a basket of solar stocks. Began trading at the recent peak for solar stocks in 2008; down 60 percent from the peak, but stable the last year.

Deepwater Drillers Rallying

Deepwater drillers rallying: Bernstein note raises eyebrows. Deepwater drillers are oversold and pricing in a drastic drop in rig prices, Bernstein says.

Deepwater drillers are all rallying again today, and have stabilized in the last few days...perhaps because they are now discounting a near collapse in rig prices.

The Bernstein note said that deepwater drillers were now discounting a decline of 33 percent in deepwater rig rates.

Bernstein says that is way oversold: "The market's outlook appears overly pessimistic as upward pressure on crude prices, attractive deepwater economics due to immature geology and potential incremental demand from Petrobras should limit the downside."

Elsewhere: Gamestop getting hit on all ends...down 8.3 percent...not only did Best Buy say that game sales were weak, but they also announced that they would start selling...used videogames! They can exchange their old games for Best Buy gift cards.

Top Drillers Now:

Deepwater:

Transocean

Noble

Diamond Offshore Drilling

Land-based:

Nabors Industries

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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