Rarely do I try to let emotion get involved (that will kill you as an investor or trader), but I am ultimately frustrated with the solar sector right now. After the Trina Solar (TSL) debacle my next two candidates to add/replace the position I had sold down in Trina so as to keep the sector weighting consistent were Canadian Solar (CSIQ) and Solarfun Power (SOLF).
Canadian Solar was the 2nd cheapest stock in the space after Trina (so it still appeals to my growth at a reasonable price tendency), and Solarfun is essentially the people's champ (where traders flock to everytime the sector gets hot) And unlike Trina, both are trading above both key moving averages (50 and 200 day) - hence the reallocation of money I wanted to do into either (or both) of these names.
- The 50 day moving average on CSIQ was in the $32s last week so I was poised with a large buy waiting there; but the stock only fell to $35. 5 sessions later it just hit $48. From $35 that's a 37% gain.
- The 50 day moving average on SOLF was just below $18 last week, but I was greedy and was hoping to see it fall to its 200 day moving average in the $16s to layer in a large buy. 5 sessions later it hit $23. From $18 that's a 28% gain.
Anyhow, because Canadian Solar (CSIQ) decided it was not going to become a forex trader, they were able to raise guidance substantially. Also a move into the US market. Must be nice to have a management that just sticks to a simple game plan.
- Canadian Solar Inc. ("the Company'', ''CSI'' or ''we'') (Nasdaq: CSIQ - News) today announced that it will increase its 2008 annual revenue and output guidance to reflect the sales of its e-Module products. These sales will be realized in H2 of this year.
- The Company announced that it has commenced delivery of e-Modules to Pro Solar Solarstrom GmbH and Iliotec Solar GmbH of Germany. The companies signed annual supply agreements with CSI in early 2008. The total shipments to these two companies are estimated at 24.5 MW before the end of 2008. As of today, CSI's total committed sales of e-Modules in 2008 is 35 MW, with approximately another 20 MW of firm interest from additional customers.
- The company is accordingly raising its annual guidance for 2008 from 200 - 220 MW to 230 - 260 MW in output and its estimated annual revenue from $650 - $750 million to $750 - $870 million. The company estimates that it will ship approximately 10 - 12 MW of e-Modules to USA and South Korea in 2008, thus making these two countries significant markets for CSI.
- Based on robust market demand for our products, the Company plans to increase its annual ingot and wafer capacity from the previous target of 40 - 60 MW to 150 - 200 MW; to increase our internal cell capacity from the previous target of 250 MW to 400 MW and to increase module capacity to 800 MW. We expect to have the above new capacity fully commissioned at the beginning of 2009.
Disclosure: Long Trina Solar in fund and personal account
This article has 26 comments:
Rose Street
Beat
As to CSIQ, it sure has sentiment behind it, largely due to its blow-out surprise this past quarter, which itself was due in no small measure to currency gains. It may not surprise quite as much this quarter as it did last quarter because expectations have come up. Also, CSIQ has run so hard, it could easily correct 20% (look at ASTI chart in past 2 months).
TSL, on the other hand, is more set up to surprise because expectations are low.
Jack
But it would of been nice to have nailed CSIQ, enjoyed the run and moved into TSL when its ready to finally not disappoint ;) Unfortunately the crystal ball was cloudy this time around
My crystal ball is perpetually cloudy. When yours de-clouds, let me know.
Until then, all I can do is find companies with compelling metrics and (1) hope I'm right, and (2) hope the market will see it.
So far, I'm doing OK. recommended CSIQ at $18.56 five months ago, and PWE at about $30 about seven weeks ago. TSL is about even money with where I bought it (and recommended it) at $41.
Only time will tell us if I have pulled a trifecta, or a 2:1 split.
Jack
No discipline works all the time. The strongest stocks often travel far without visits to their 50 day averages. When I really love a stock, I'll typically nibble while hoping for the "perfect" buy point as an opportunity to buy more aggressively.
I first got involved in CSIQ at 10, in part because I liked the basing pattern, but sold much too quickly because I didn't trust Chinese stocks at the time (especially one that calls itself "Canadian Solar"). I've been in and out of this and other solars since then, reducing exposure on explosive upmoves and switching the proceeds into solars that seem more timely. When SOL took off in May, I sold most of my holdings and moved into SOLF and TSL which seemed to offer a better ratio of reward to risk. Sold all of SOLF when it doubled in two weeks. Sold a lot of TSL on the day earnings came out (and wish I'd sold more; the volume pattern remains ugly). Bought my first stake in ESLR recently when it pulled back below 10 AFTER reporting a huge new contract. Added to SOL after it priced its stock offering (and hope to buy more on a pullback near 21), and also added a lot of CSIQ at 41 the day before the company raised expectations (got lucky), intending to buy more if CSIQ did drop to the mid 30s. If the dollar continues to rally, TSL should be able to surprise on the upside in future reports; it does seem to be the best value in the sector now. But I'll need to see a much improved volume pattern before buying more TSL.
I think the overall market has been threatening 12,000 and 2400 for quite some time (and I think penetrated 12,000 today), and it would not shock me to find us back at 11,500 and 2200 in a week or two. I'm not predicting that--just saying it's a reasonable possibility.
If that happens, the solars may again be buyable lower than they are now. I will load up the boat with TSL if it goes back to $35.
SOL I don't like because lower poly prices are upon us.
Jack
To CSIQ after reading some comments(for ex. zachs.com comments) I just want to clear some things up....they (CSIQ) raised revenue guidance from $650-750 mil. to 750-870...In Q1 they had revenues of $171.2 mil...and earned just about 19 million....which leaves at an operating margin of just 11%...Lets us just assume that margin stays equal(which it will not the margin of CSIQ will expand but lets just talk worst case scenario)...and we take 810 mil of revenues(also conservative IMO but that is in the eye of the beholder) then we would get an income of about (.111x810)$90 million mil....so the stocks is actually trading at around 14 times earnings at the moment....and not trading at forward earnings of x24...which would imply earnings of $54 million so I cannot really understand those calculations...
Also as Jack mentioned above, the market is really not looking too "hot" right now....So surely there is the possibility solars will correct even further...Anything can happen, especially with solars, but I am a firm believer in the sector and really like TSL, STP, CSIQ, SPWR(but a little cheaper would be nice in the case of SPWR especially).....With kind regards from Germany CW
Long ABX, CSIQ, NFLX, STP, TSL
PS What do you guys think about investing a little bit more downstream in the solar sector....For example AKNS?I mean at 170 million it has quiet the low market cap(just concerning the market cap since they don't earn money...)but their is some obvious issues....but has anybody have extensive knowledge about AKNS and its future....would be much appreciated....
On the plus side, they have the capital and lack of debt to get them through the year at their current "burn rate" (which will hopefully decline since they're focusing more on cost discipline); their proprietary panel design is successful and should boost their margins; they're moving into new markets (Hawaii and Colorado); and their prospects are very good once Congress gets it together re renewable energy tax credits. They also stand to benefit as panel prices start to decline in 09. They are one of the major installation players in a field that also includes the private companies SolarCity, REC, and Borrego, as well as the recently public Real Goods Solar.
"One day does not make a pattern, of course, but CSIQ gave up 10% today and TSL held up nicely."
This comment made on 6-19-08 is interesting and true (but misleading, in a way, intended by the author): CSIQ was down 3.77. while TSL was up 0.38 on 6-19-08.
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A bit of history here: (Following appeared as a comment on another article "Further Thoughts on Trina Solar …")
6-14-08 10:01 PM
An interesting observation by Aquaculture:
06-13-08 close.
CSIQ: 39.00 - TSL: 38.99
Its a neck-and-neck race Jack.
Have a great weekend.
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But the closing prices on 6-19-08 were:
CSIQ --- 47.23 --- down 3.77
TSL ---- 39.36 --- up 0.38
The closing price certainly gives a better picture as to which horse is pulling ahead, rather than the changes in just one day (CSIQ down 3.77, TSL up 0.38).
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Even with drastically different starting points, CSIQ was able to reach parity with TSL at 39 on 6-13-08 -- that was a tremendous display of strength on CSIQ's part already. Since then and until today, CSIQ continues to pull ahead and leaving TSL in the dust. CSIQ is the strongest stock in the strongest and the most promising sector - solar. It is my believe, CSIQ will continue to out-perform TSL for a long time to come.
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Final note: Dr. Jack Yetiv worked very hard and very diligently and for very long to uncover this gem (CSIQ), long before its meteoric rise to become the King of Performance and dethroned FSLR some weeks ago. CSIQ was Dr. Yetiv's top choice for a long time -- until TSL came along. Even so, he still considers that CSIQ is a better stock than any other stock in the solar sector, except TSL, of course.
When a stock's fundamental picture and technical picture agrees with one another, the chance for investor's success will be very much improved. However, if they disagree - be very cautious.
CSIQ has never been a weak stock. During the sharp sell-off of solars early this year, only two solars were able to stay above their 200-day MAVG -- CSIQ & FSLR.
CSIQ: Red line is its 200-day MAVG:
bigcharts.marketwatch....=
Relative performance: CSIQ vs TSL (along with FSLR & STP)
stockcharts.com/charts...
If your "BigChart" already has default settings, your chart may display MAVG other than 200-day MAVG. Now do the following:
Time is set to: 1 year
Frequency is set to: Daily
SMA (simple moving average) is set to: 200
bigcharts.marketwatch....
Time is set to: 1 year
Frequency is set to: Daily
SMA (simple moving average) is set to: 200
*** You can change ticker to TSL or any other stock symbol.
*** Except FSLR, no other solar stock could stay above its 200-day MAVG early this year when solars had a sharp sell-off.
bigcharts.marketwatch....=
But when I pick stocks, I do not focus on short-term returns. Indeed, after I recommended CSIQ at $18.56, it dropped into the upper $15's, and then recovered only a month or two later-and then took off like a rocket.
Similarly, after I recently recommended TSL in the low $40's, it made it in relatively short order all the way to about $52--and then actually revisited the $35 range.
CSIQ may well win this race long-term as well (say, by the end of this year), although I am betting on TSL. Sentiment has a funny way of changing (look at FSLR, SPWR, STP, and even ASTI's recent trip up and down).
Instead of "sentiment," I'd rather hang my hat on earnings--which will be in the upper $3's for TSL and upper $2's for CSIQ this year.
Jack
CSIQ is your only solar stock, good for you.
I sold my TSL today, and beefed up on CSIQ -- choosing to hang my hat on STRENGTH. I see CSIQ is a real gem which was uncovered by Dr. Yetiv.
True, CSIQ was down big today (6-26-08), closed at 42.89 down 2.35 (or 5.19%). Over a one-year period, CSIQ still out-performs any other solar stock.
seekingalpha.com/artic...
still, CSIQ has a low P/E = 13 for 2008 and P/E = 9 for 2009
do your math.
www.thestreet.com/stor...
Jack H.
You wrote and I quote: "up more than 300% since I first bought it". Good for you. I also did not know that you had written a research article that mentioned CSIQ too.
I bought CSIQ after reading Dr. Yetiv's article, and I also bought TSL after reading his article as well.
As it turned out that CSIQ is a real gem, while TSL is a lemon, so far at least. One has to look at the future, so I decided to get rid of the weak one (TSL) and then use that money to beef up the strong one (CSIQ).
I might add that I have made far more money from CSIQ than the money I lost on TSL.