The Oxen Report: Its Time to Get Sunny and Put a Smile on Your Face

November 1, 2010

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This morning is definitely a good morning that is paying off for our perseverance with the solars. Jinko Solar (JKS) reported an EPS of 1.75 vs. consensus at 0.96. The company beat revenue estimates with $215M vs. the expected revenue at $154M. The company saw a 26% YOY revenue growth. The company upped guidance moving into Q4 by over $50M above consensus estimates at $210M – $220M. The earnings were absolutely outstanding and were better than even I had thought they would be. So, the stock of JKS? It is up over 15% in pre-market. We will be selling this position to start the day.

Further, we will be selling our DD position in Yingli Green (YGE). On Friday, we took a DD position in YGE with a second entry at 11.43 to bring down our position average to 11.63. We will be looking to exit this one at 11.96 and above. With the JKS earnings and a market that is looking to rally today on strong Chinese and European markets, Yingli should definitely be able to make the move to 11.96 and above.

The picture above, however, shows the difference in quarterly installations in Germany with Q2 vs. Q3. Every category of solar installations slowed from Q2 to Q3. Companies with very heavy or almost all German exposure may suffer – First Solar ehmm.

Let’s take a look at another solar position that should rally this morning we could still slip into…

Buy Pick of the Day: Suntech Power Holdings (STP)

Analysis: Unfortunately before today, Jinko Solar was not a huge name in the solar game. Some solar analysts most likely did not even cover this stock, but it is starting to pull in some very serious revenues that cannot be ignored. With over $215M made in Q3, this company now has made more money in this quarter than China Sunergy (CSUN), Evergreen Solar (ESLR), and just under Solarfun (SOLF). While the company is not a leader in the market, it should still help to put some spring in the solar stocks as we head into another week. Further, the market is looking positive on Chinese data, which is good for most solar companies since many are based there.

With the big earnings and the stock market looking goblin green (DOW up over 50 points in pre-market), we wanted to see if there are any solar positions we could slip into this morning at the open and pull 2-3% off of them to the upside. That capability is definitely possible with Suntech Power Holdings (STP). This is a Chinese-based silicon PV cell maker that actually has one of the top five market caps with over $1.5B. The company is very cheap at below $10 per share, which is mostly due to a very bad quarter this company had in Q2. The company missed estimates by over 3000% with a -0.97 EPS vs. expectations at 0.03.

The reason for the major miss was because of a one-time charge the company accrued for a write down they had on thin film solar production they were trial running. It failed, and the company had to write off a lot of the costs to shut down production. That helped drop the price over 15% when it first occurred, and the stock is still down over 6% since that release.

This has made the stock undervalued on RSI with lots of upside on its bollinger bands and limited downside. The stock has over 15% of upside to its top ban while only around 5% of downside potential. This morning’s news should help to pour some investors into this stock. It is fairly traded on stochastics with tons of room for buyers to reenter the stock after they flooded out of it to end last week.

We want to get involved right out of the gate, so put a buy order in within first minutes or before open.