Why Solar Stocks Popped Today

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 Trina Solar (NYSE: TSL  ) and Yingli Green Energy (NYSE: YGE  ) jumped 14% and 10%, respectively, today after news of an upgrade from Wall Street.

So what: Deutsche Bank analyst Vishal Shah upgraded both stocks to a buy rating, and has a price target of $18 for Trina Solar, and $8 for Yingli Green Energy. That's about a 20% upside for both stocks if the target price is met in a year. 

Now what: Shah is arguing that demand in China will pick up in the second half of this year, driven by a desire to take advantage of incentives that expire at year end. Overall, the prediction of higher demand is similar to China's own predictions, industry prediction, and what companies have said themselves, so it should be no surprise.

What would be a surprise is a profit from either Trina Solar or Yingli in the second half of the year. Trina has the best shot at making money, simply because it isn't as weighed down with debt as Yingli, so if you're looking for exposure to Chinese solar, that's the better bet. But I'd still look at a profitable company like JinkoSolar first, because it has $1 billion in project financing available, and a better balance sheet than either Trina or Yingli.

Interested in more info on Trina Solar? Add it to your watchlist by clicking here.

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Comments from our Foolish Readers

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  • Report this Comment On September 27, 2013, at 5:17 PM, i4s wrote:

    Why Solar Stocks Popped Today? Because you shorted?

  • Report this Comment On September 27, 2013, at 6:21 PM, sonofTesla wrote:

    Haha...Travis, all too familiar commentary from the Motley Fool's solar "expert".

    I thought you were staying away from Chinese solar altogether and these were bad investments. Readers, feel free to go back and look at his past articles and my comments. If you've been listening to the author, then, I'm sorry.

    As for me, I've made massive amounts of money in the past 6 months by investing in Chinese solar and I would highly recommend you do your own research and you will see Chinese solar is here to stay.

    The only thing I can possibly fathom is the Fool is using the author as a pawn to continually bad mouth certain companies in the hopes they and their investors can buy these stocks cheaply.

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