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Lejun James Shao is the founder of www.myIRAs.net (http://www.myIRAs.net/), WhitePine Investment Inc of USA, and CEO of WhitePine Software Inc, Beijing, China. He was the top finisher in MSN's 1st US One Million Dollar Investment Contest, "Strategy Open Tournament," with a +45.88%... More
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  • Can Solar Stocks Keep Hot? 0 comments
    Nov 6, 2010 7:43 AM
    In my September 3, 2010 article  " Solar Sector Hot for a Reason" ,  I gave the main reason behind the strength of solar stocks:

    "The fundamental strength behind the earning upward revisions is the high global demand for solar products and capacity constrains."

    We also predicted:

    "At current prices, we believe that the solar sector presents good long term investment opportunities."

    Now almost two months passed since the publication of that article, solar stocks as a group outperformed the market by a big margin. The following table gives the price changes from September 3, 2010 to last Friday for major solar stocks:



    *  DQ is a newly IPO stock with less than one month trading history. We use its IPO first day close price as Sep 3 price.

    As a group, they gained +19.60% on average, far succeded S&P500 +10.98% gain. Among the stocks in this group, LDK, JKS, DQ, SOL, CSIQ, SPWRA gained over +20% and SOLF, SOLR, FSLR, TSL and STP are the lagers.

    Quite a lot reached year high or near year high. Now the question is where they will go from here?

    We may see the answer soon as most will report their Q3 results and will give the guidance in the next two weeks. The following table gives the reporting date for most of the companies:



    Up to now, FSLR, JKS, WFR and SOL already reported. JKS gave a blow out result and price jumped to new year highs. SOL beat by a big margin. WFR missed but gave good guidance. FSLR beat the estimate but gross margin hit hard due to price pressure from Chinese competitors.

    Next week will be a busy one: LDK and SOLR will report Monday, followed by JASO and SOLF. SPWRA will report Thursday.

    Right now, only TSL and CSUN did not give their report dates. CSUN may delay its earning release due to recent CFO departure.

    We predict that most of the Chinese solar stocks will beat the upward estimate by big margin. We favor companies with pure polysilicon play, or vertical integration, or good management team making good cost control, better gross margin, good capacity utilization,

    I will give a more detailed view by the end of this month to show winers and losers in this group.


     



    Disclosure: own SPWRA, DQ, LDK, SOL, YGE, JASO

    Disclosure: I am long SOL, DQ.
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