David White

Canadian Solar: Value Diamond in the Alt. Energy Rough

CSIQ seems like a decent stock, but this is too much hype. A lot of institutions own it, so it is getting more play than it probably should. It has some of the worst margins in the industry. If there are significant pricing problems in the industry, as many are predicting by the end of 2008, this stock could fall through the floor. Even SOLF, which is in a similar position, has had better margins. It also has a better PEG ratio .35 (SOLF) to .51 (CSIQ).

In my mind, although it has had significant bad press, LDK is a far superior stock. It is building its own polysilicone plant. It has so far kept gross margins above 30%. It will grow those margins once the polysilicone plant is built. It has a PEG ratio of 0.17. It will be a survivor in the solar wars. It is not clear that CSIQ will be. TSL is another company that has plans to build its own polysilicone plant. It doesn't have the negative publicity of LDK. It has better margins than CSIQ. It has a PEG ratio of 0.24. What is so much better about CSIQ?

Even what you say about FSLR is somewhat false. FSLR has long term gross margins of 45%. It is in a great position to weather a price war. It may be overvalued, but the company is unlikely to be at risk of being driven into the red by the coming price wars. CSIQ is momentarily hot. Enjoy it while it lasts. It probably won't be for too long.