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rana
66 Comments
Canadian Solar Shines With Strong Guidance and Results
this is a link to some comments regarding polysilicon price, that was published today
Canadian Solar Shines With Strong Guidance and Results
i agree that CSIQ carries more risk than at the time of jack's article, but i still like it and will use technical pullback for new entries.
after doing lot of research lately on the solar world it is clear that it will become harder to pick the winners. there are too many variables in play at this time (price of silicon, incentives, price of oil, currency issues etc..).
like in other growth industries there will be few companies that will emerge as winners almost in every scenario. my pick is an equipment maker SPIR (was mentioned in earlier posts).
like jack i also like TSL a lot, but after reading the new growth prospects of the industry i'm joining the camp that isn't looking for big price drop on silicon in the next 12 months. for this reason i view SOL as number 1 pick and will add under 20.
if we have to grade by risk - TSL is little less risky on fundtamentals, but it carries sentiment risk which in case of a miss by the company can become a waterfall for the stock.
by growth SOL is graded higher (using analysts estimates for next 5 years).
this year estimated p/e for TSL is 12 and for SOL it's 16.6. next year we have 9 and 10.5.
the PEG is little better for TSL.
SOL just competed a secondary offering while TSL will probably need to do one in the near future. assuming SOL guidance includes the dilution and TSL doesn't we get better PEG and better 2009 P/E for SOL.
at this point we turn to the price of silicon and to cells and modules ASP's. these are parameters that will be very important in determining the winners and losers. the velocity of the demand will be key when prices will fall.
we must keep in mind that manufacturing costs keep rising fast. the view of falling silicon prices is detering new entrants lately (TSL is an example) while everybody still jumping on the the cell and module wagon.
a drop in demand for end products will be teriible for all the food chain. here will come absolute costs into play as well as margins. usually we just look at margins, but when crisis comes we also need to watch the staying power. SOL has much lower operating costs than TSL, which makes it more resiliant in a case of crisis along the whole food chain.
with all that said the difference between the 2 is lower than it was 2-3 weeks ago when i first started looking at SOL, as it wnet up a bit while TSL dropped a bit.
holding - SPIR (viewing this one as winner in most cases) SOL TSL SOLF CSIQ LDK STP (rating and quantities by this order).
Selling Some Yingli and Trina Solar on Dead Cat Bounce
we as investors/traders must have a business plan, or as it is called "trading plan". it should start with the most general issues of who we are (financally, psyhcologically..) what we want to achieve (what return, what risk...) and how we plan to achieve it.
this should all be in our computer and should be refined periodically. when time will pass and if we will follow our plan and make it better we will become more and more successful.
if we are at the age of 30 we will have different goals than when we are at 70.
if we have 10000 the return we will demand will probably be much different than if we have 1000000 (assuming that we trade full time)
and so on
basically there are so many parameters that vary for each person and hence the reason for the different systems
for these reasons we don't have "rational" markets. all the pricing models etc can't quantify psychology of people (fear, greed etc..) and for this reason we have a market. if it was all quantifiable with absolute accuracy we were all paying smae price at a given time.
need to stop here as this subject can take forever. but if some of you haven't been following a plan, try and read about money management. this is where each investor should start and the aspect they should master the most.
A Second Try for Evergreen Solar
so basically ernie is right. when we enter a technical play we have a given probability for it to fail and to reach a certain price target.
i for one haven't seen a system that never failed, but i'll be very thankful if someone here can show me this system :)
Selling Some Yingli and Trina Solar on Dead Cat Bounce
i say "every trader/investor should use the method that they are comfortable with as long as they have good positive return".
if mark is making money by using his method, it is good for him to stick with it as long as he doesn't find a better one.
people use different methods for various reasons, which in my view are mainly dependant on the psychology of each individual.
for me the method combines fundtamentals with technicals. using the fundtamentals to give the direction and the technicals to provide the timing and the strength. off course i'm talking generally here, since there are times that the magnitude of a move might be derived from fundtamentals etc...
the bottom line is that you and jack are right and so is mark, as long as what you're doing is making you money in the end of the year. if not you should find a new system or refine the one you use now.
A Second Try for Evergreen Solar
Selling Some Yingli and Trina Solar on Dead Cat Bounce
i have to assume he checked the outcomes of his trades and he has a positive return on the solar sector trading using the technical analysis as part of his system.
we are not in a competition. in each trade there will be another person that will make more money than us. we aim to make money on our trades and maximize our return based on a system (technical, fundamental, statistical....)
another good thing when posting, in order to be productive for as many of us here, will be to post stocks or trades in advance and not in retrospect. in advance is useful and retrospect is usualy harmful (at least it's what i think)
trader mark and jack are very helpful as they say what they are going to do and why. we need to add to what they are doing if we can or to ask questions or to debate it with sound resoning.
i like what they are doing as it helps me to check my reasoning and gives me good ideas to check by myself. off course the final decision on how and in what to invest is mine as only i know what is my style of trading, my risk tolerance and all kind of other factors in my decision making process.
so thanks jack and mark and all the others that post good info. let's keep it useful and productive. :)
Further Thoughts on Trina Solar and the Solar Space
it will need to boost guidance significantly to cancel the secondary.
btw SPIR is moving nicely, might be the new product.
Selling Some Yingli and Trina Solar on Dead Cat Bounce
i agree about technicals and solar sector. there are so much news for this sector that bring up the volatility and the higher the volatility the less reliable are the charts. still ona can adjust the style of trading (technical analysis, in this case) to the higher volatility, or just keep the old style as long as it's profitable (even if it's less profitable than with traditional stocks/sectors).
to me a very good trading style in this sector is to find the candidates for short squeeze, like SOLF was not long ago. when it occurs these stocks go balistic. in SOLF's case the writing was on the wall after CSIQ reported.
Further Thoughts on Trina Solar and the Solar Space
they are manefacturersof equipment to both PV and thin film, so it is a play that has footing no matter which of tese technologies win. it has around 100m$ market cap and it's not profitable yet but might become one this quarter or next. there is only one analyst covering the company.
it announced a new product - a 25mw combined cell and module line that makes it easier for companies that want to integrate.
anyway it's just a suggestion and you can all make your own dew dil...
i for one think it's a greatway to play the solar world for the next 6-24 months.
for technitians it had a bullish divergence on the RSI which is usualy a good buy signal for the short term.
Further Thoughts on Trina Solar and the Solar Space
the one big/huge problem here is the si cost you assume. it reminds me of last year when everyone was talking about how si prices will drop, but in reality they went up. if this will be the case here or even if it will just stay where it is than all the calculations will be way of the mark.
still, as a stock holder i love the analysis :)
Further Thoughts on Trina Solar and the Solar Space
it is also good holding in case the shortage won't ease, since in this case ASP will still hold and the market will absorb every expansion in the capacity produced.
in the long run it is clear to everyone that the giants will step in, like we saw little giant Bosch last week and with the likes of GE at the corner waiting. it is too hard to predict what will the industry look like within 5 years, but the direction is clear - expansion, capital reqiurements, competition will bring consolidation and new big entrants that will change the game field.
for me it looks like good entry point for SOL for fundametal and technical resasons, but also holding TSL, CSIQ, LDK, SOLF.
one thing i have to mention is that the company is selling more shares now as it announced 2 weeks ago which will dilute the earnings around 15% or little less. on the other hand the cloud od when it will have to raise more and how much is out of the way.
regarding UMG - this is future possibility and it might become major or fail to become one. there are many other technologies and the big winners are still out there to be declared. it will be foolish on my part to see things that are still not there. i give CSIQ premium for having the possibility of being early bird in good field, but sure can't make bigger bets while things aren't really sure.
snyway investing is simple - risk and reward. when we go for pure value we lower rsik drastically and the reward will go down accordingly. we can use historiacl volatility or implied volatility as it is derived from the options and calculate the range of return that we are playing for with the accumulated risk for playing it.
when we enter a play like TSL/SOL we go for a skew (at least the way we view it) and we hope that over time the market will correct it and that our assumptions were correct and that no new data will crash these assumptions. we also take into account few non economic factors like how investors feel about a company and i think that SOL management is doing great job about managing expectations and good disclosure unlike TSL management, which is doing almost all they can to destroy the good operational work they do.
sorry for the length of this post and will keep it much shorter in the future, it's just hard to say one thing and not explain why i think what i think and why i interprate it the way i do.
this is all my views only and can be wrong since the amount of research i did may be big, but still is only a drop in this huge industry.
Further Thoughts on Trina Solar and the Solar Space
we have higher margins, higher 5 yr. growth estimates and almost equal p/e for 2009. it's in favor of SOL.
makes me think SOL is better overall value and not taking into account the management advantage, regarding the investors community.
regarding CSIQ i di believe most of the 8M is for currency gains which translates to lower net profit of about 6 M, net of taxes. it gives us around 0.42$ per share if we take the whole number.
Further Thoughts on Trina Solar and the Solar Space
Further Thoughts on Trina Solar and the Solar Space
they can focus on general market conditions, sector conditions, size of companies. financial strength, p/e, growth, cash flow etc...
since theyall play in the market we must take all into account. if we are daytraders we need to focus on the momentum of the stock and the sector while using technicals to make our entry/exit decisions.
if we swing or invest we must make deeper considerations. we need to understand that we will not enter at the exact lows or exit at the highs.
regarding TSL, it looks like the company is giving great operationsl results but they get discounted for many of the reasons you guys are talking about here.
they get size discount, blur disclosure discount, missing the whisper number discount(the 0.51 that they reported), they also have low growth prospects for 5 year view whcih is kind of silly since 5 years is eternity in growth sectors but it is what it is, they also get the award for making material decisions every quarter (open new plant, not open new plant, new accounting hange etc...)
all that said and done as an investor/swing trader i view this as buying opp. i also like SOL, CSIQ, SOLF, LDK here. (CSIQ,SOLF are very much alike.
very good articles from jack and tmark and great comments from hob and the rest.