GT Solar Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of solar equipment manufacturer GT Solar (Nasdaq: SOLR  ) were reaching for the sun today, gaining as much as 17% after some very positive comments by a Wall Street analyst.

So what: Wunderlich Securities put out a note on GT Solar today, suggesting that the stock's current valuation makes the company an attractive takeover target. According to the Wunderlich analyst, GT -- which makes equipment that's used to produce polysilicon and cast multicrystalline ingots, both of which are inputs for solar wafers and cells -- could be targeted by Amtech Systems (Nasdaq: ASYS  ) , BTU International (Nasdaq: BTUI  ) , Novellus Systems (Nasdaq: NVLS  ) , or Applied Materials (Nasdaq: AMAT  ) .

Now what: Investors love to hear that a stock is cheap. They also love hearing that a stock is a takeover candidate. Tell them it's both at once and you're almost guaranteed to see some investors dancing on the bar with lampshades on their heads. Based on estimated earnings per share of $1.11 for the fiscal year ending in March, GT's stock is trading at a price-to-earnings ratio of just 8.2, which certainly looks cheap. If you've suddenly got a yen for GT Solar, you're probably best off digging into the numbers and confirming the "cheap" thesis rather than speculating on a takeover. Takeovers, even the ones that seem to make the most sense, seem to have a habit of never materializing.

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