User 161444

Trina Solar: Best Value in the Solar Space

As to which solar stocks I like: I don't like any of the Chinese solar companies because for most of them (and there are exceptions of course) their accounting is suspicious, their balance sheets are mostly horrendous, they have no sustainable competitive advantages, and they are known to virtually every trader on Wall Street.

The only solar company I do like right now is ATA.TO, the one stock nobody has even heard of. ATA.TO is undergoing a restructuring, and has several divisions, but they own a solar subsidiary called PhotoWatt which could become quite valuable in the year ahead. Photowatt does nearly $200 million in solar PV sales and is years ahead of the competition in actually producing and selling MgSi modules (something that CSIQ is starting to hype).

Since you like CSIQ, you'd be pleased to know that ATA was once the largest shareholder of CSIQ and that the CEO of CSIQ used to work at PhotoWatt, the solar sub. of ATA.

Trina Solar: Best Value in the Solar Space

You are once again comparing companies to each other that have no basis in being compared and are thereby misleading potential investors. It's a shame that this site gets so much publicity, but the reports placed on here have no editorial oversight.

There are many different segments of the solar industry and many different companies each having completely different risk profiles, financial positions and growth prospects. For example, how is AKNS in any way comparable to CSIQ or SOLF or TSL? Do you even know what AKNS does? It's like comparing DELL to INTC just because they are both in the computer industry.

There are countless other examples on non-comparables in the list above that anyone with a modicum of understanding of the solar industry would be able to point out. I only hope that readers of this blog don't make investment decisions in the solar industry based on this misinformation.

In case you do, just remember that the solar industry has many parts and different companies operate in various segments of the industry. Some make silicon panels, others make wafers, some make thin-film, some only make cells, some companies are fully integrated, and others are not etc. To see if one company or another is undervalued, one needs to compare it to another company that operates in the same segment and with the same business profile.

Canadian Solar: Value Diamond in the Alt. Energy Rough

not a place for financial accounting lessons.

Let me ask you a question, I have an apartments for sale. I collect $1 million a year rent on the apartment, and that's up from $200K last year! I want $10 million for the apartment. It's a great deal.

Yes, the apartment requires $5 million a year in maintenance, rent is usually overdue for six months at a time, and there are plenty of other apartments for sale in the neighborhood that are exactly the same and require less maintenance. But, not to worry, my rent went up the most last year, I can assure you of that. So that means I have the best apartment in the hood. Why else would my rent be going up so much? So how about that $10 million? It's a great deal.

Canadian Solar: Value Diamond in the Alt. Energy Rough

Hi Jack,
Just because a company reports accounting earnings, doesn't mean it actually makes money. You need to look at cash-flow statements, and when not available, compare balance sheets between quarters. Don't understand adjusting for taxes? Sorry,

Canadian Solar: Value Diamond in the Alt. Energy Rough

Hi Jack,

Thanks for creating some excitement about this stock and allowing me to sell. What you're missing in your analysis is three things:

1. CSIQ has no competitive advantage in it's business. Nor do any of the Chinese silicon-based PV module makers. FSLR is entirely different story, since the barriers to entry in thin-film solar are huge. There will at most be a handful of thin film companies, while there will be hundreds of silicon module makers. Company's with no advantage in industries with zero barriers to entry, do not deserve P/E's above 10, let alone 5 in my opinion.

2. More to the point, CSIQ's earnings are a complete mirage. They really don't make any money. Yes they may report earnings, but when you actually bother to analyze the financial statements you'll see continued huge cash outflows. The business still needs a huge amount of financing to survive and there's no telling how it will do in a tougher financing environment. What's the proper valuation for a business that makes no money, still requires huge capital investment, has low odds of every attaining higher margins, and has zero competitive advantage?

3. Finally, in general, when looking at Chinese solar companies you need to adjust earnings to compensate for their low level of taxes. Without doing that you run the risk of faulty comparisons to non-Chinese solar companies, i.e. assuming the Chinese companies are undervalued, when in fact when you adjust for taxes, they are extremely overvalued.