Why Chinese Solar Stocks Popped

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: Solar stocks are shooting higher again today as the strong run in 2013 continues. LDK Solar (NASDAQOTH: LDKYQ  ) , Canadian Solar (NASDAQ: CSIQ  ) , Yingli Green Energy (NYSE: YGE  ) , Hanwha SolarOne (NASDAQ: HSOL  ) , and JinkoSolar (NYSE: JKS  ) led the way, gaining between 10% and 22% today.

So what: China's State Council said it plans to build 35 GW of solar by 2015, which would mean about 10 GW of annual demand for struggling solar manufacturers. It's also worth noting that this comes at a time when it appears that tariffs on Chinese solar panels will go forward on Aug. 6 at rates of up to 67% in the European Union. If both events happen as planned, then it could be a wash for solar manufacturers, leaving them in the same place they were a few months ago.  

Now what: The Chinese solar installation figure isn't entirely news because we've been hearing reports that China will install 40 GW by 2015 since December. It also highlights that China has to create subsidized domestic demand to support subsidized manufacturers, a slippery slope for investors buying companies who aren't profitable even with all of this government support. All five companies that have popped double digits today are losing money, and any pop in shares is due to speculation that they may make a profit someday. Until that day comes, I'm steering clear.

The more sustainable bet would be to buy U.S. energy companies who are expanding into a fast growing domestic energy market. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


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  • Report this Comment On July 15, 2013, at 9:51 PM, sonofTesla wrote:

    Do yourself a favor and do not listen to this author...He knows solar like I know the pains of child birth (not at all).

    Buy Chinese and reap the profit. YGE, TSL, HSOL, CSIQ, JKS, and JASO to be exact.

  • Report this Comment On July 25, 2013, at 11:50 AM, tblakeslee wrote:

    HSOL is not a Chinese stock. It is Korean but has factories in Germany, Malasia and China.

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