Why Canadian Solar's Shares 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: Shares of solar module manufacturer Canadian Solar (NASDAQ: CSIQ  ) jumped 13% today after the company released earnings.

So what: Third-quarter revenue came in at $490.0 million and gross margin increased 7.6% sequentially to 20.4%. The bigger news is that the company swung to a net income of $27.7 million, or $0.56 per share. This is one of the only Chinese solar manufacturers showing a profit right now.  

Now what: Canadian Solar is one of the leaders in systems development, particularly in Canada. These systems were the real reason the company is profitable and account for the expended margins. It was also mentioned as a possibility that Canadian Solar will spin off solar projects into a public entity sometime in the future. Nothing is final but solar companies are looking for ways to finance projects without holding them on their balance sheets, so keep an eye on this in the future.

Canadian Solar is one of the best operators in China and this quarter's results prove that. It's one of only a small handful of Chinese solar stocks worth even considering right now.

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