American solar company Evergreen Solar is filing for bankruptcy. Their competitors have driven costs down so significantly that ESLR could not compete, turning the once billion dollar company into a nothing sandwich.
While it may seem like a time to despair for the solar industry, analysts think is may only be a sign of despair for the American solar companies.
That's because it was not American solar companies who undercut prices so harshly that it sent Evergreen bankrupt, it was the Chinese solar manufactures.
In fact, China is undercut them not just because of the old standby -- cheap labor -- but because China is overwhelmingly more conducive, and supportive, of the industry.
"Chinese solar manufacturers enjoy extensive support from government industrial policy. They benefit from inexpensive capital, low-cost electricity and real estate, as well as less-expensive labor," says Mr. Pichel. "The global solar industry is growing quickly, in part because of government subsidies to promote clean-energy production and because of falling panel prices." (via Wall Street Journal)
Demand for solar panels is still high, and expanding worldwide, especially in Asia. It is ultimately the electricity costs and the panel costs are often the final factor in determining who will supply them.
Suddenly, Chinese solar stocks are looking a little more attractive than they did before.
What does this mean for the American solar manufacturers? It seems that even with a strong competitor out of the way, ESLR's bankruptcy may not be a bullish sign for anyone but the Chinese manufacturers who can continue to undercut U.S. profit margins.
Interested in trading on this idea? Below we list key Chinese solar panel manufacture companies traded on the U.S. market.
Do you think bullish times are ahead for these names? Use the data below as a starting-off point in your analysis.
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
1. LDK Solar
2. Trina Solar
3. Yingli Green Energy
4. JA Solar Holding
5. JinkoSolar Holding
6. Hanwha SolarOne
7. Daqo New Energy
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.