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Why Canadian Solar Inc. Shares Could Bounce Back to $40

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Canadian Solar (NASDAQ: CSIQ  ) rallied as high as 4.7% on Monday after FBR Capital upgraded the solar products specialist from market perform to outperform.

So what: Along with the upgrade, analyst Aditya Satghare reiterated his price target of $40 on the stock, representing about 30% worth of upside to Thursday's close. So while momentum traders might be turned off by Canadian Solar's year-to-date price weakness, Satghare's call could reflect a sense on Wall Street that its growth prospects are becoming too cheap to pass up.

Now what: According to FBR, Canadian Solar's risk/reward trade-off is rather attractive at this point. "We upgrade Canadian Solar (CSIQ) to Outperform from Market Perform and maintain our $40 price target, based on our view that the current stock price gives little benefit for the cash flow generation from the company's diverse project pipeline beyond the project buildout in Canada," Satghare said. "Within the China complex, we see Canadian Solar as having built one of the best global project development businesses and pipelines, and markets such as Japan and China offer multiple opportunities to monetize this pipeline in the future." Given FBR's solid stock-picking track record -- currently ranked in the top 10% of our CAPS community -- less risk-averse Fools might want to take a closer look at Canadian Solar.

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  • Report this Comment On July 07, 2014, at 1:40 PM, Waldo wrote:

    Canadian Solar is one of the companies that have a long term pipeline of projects, access to inexpensive high quality panels and a very bright future. Even with US tariffs, they will outperform the competition. I have been long on them since last summer, and will acquire more before they pop in the very near future. Good luck all!

  • Report this Comment On July 08, 2014, at 10:21 PM, dogmatica wrote:

    Hi Waldo,

    I may be mistaken but I think that Canadian Solar can use the components they manufacture in Canada (N.America) for projects in the USA, free of harm from tariffs or duties. Their Chinese components can be sold elsewhere in the world.

    I could be wrong … I could be right!


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Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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Related Tickers

8/28/2015 4:00 PM
CSIQ $18.83 Up +0.60 +3.29%
Canadian Solar, In… CAPS Rating: **