3 Reasons to Buy LDK Solar Today
By
Dave Mock
June 18, 2009
|
Historically, tumultuous times offer some of the best opportunities to buy stocks, and the market's current mess surely qualifies. And when looking for tomorrow's leaders, many investors are kicking the tires on solar companies like wafer maker LDK Solar (NYSE: LDK) and actually see many reasons to consider buying shares today.
In our Motley Fool CAPS community, 1,371 investors have given a bullish or bearish opinion on the company. Poring through the detailed information packed in pitches and other comments, I've dug up three of the top reasons why many members consider the stock a buy today:
1. Chinese government involvement: Chinese solar stocks like LDK and JA Solar (Nasdaq: JASO) received a boost recently as investors see signs that the Chinese government will play a larger role in implementing solar power in the country. Beyond many European and U.S. efforts, many CAPS members see a big opportunity for solar in the domestic market of China and believe LDK stands to benefit.
2. Increasing efficiency: Spot polysilicon prices have fallen drastically from the high of last year, making silicon-based modules more price-competitive with thin-film modules from First Solar (Nasdaq: FSLR), to the detriment of equipment supplier Applied Materials (Nasdaq: AMAT). LDK is looking to ramp up its own in-house production of polysilicon, its key raw material, at prices much cheaper than today's and it expects the move to bring gross margins up from 1.7% in the first quarter to the 25% range in the long run.
3. Improving demand: Although the solar industry has been hurt by lower demand and lack of financing for projects, several companies see brighter days ahead. U.S.-based SunPower (Nasdaq: SPWRA) and Chinese company Suntech Power (NYSE: STP) recently said they have seen positive signs in the industry, and Yingli Green Energy (NYSE: YGE) said it's seen a big increase in demand lately.
Of course, there's a lot more devil in the details of these buy-side opinions, which is why CAPS is such a great resource to check and balance your own analysis. You can read the bullish and bearish sides to every stock. To see what the very best CAPS members are saying now about LDK Solar, just click on over to Motley Fool CAPS and have a look -- it's all free, and your opinion is welcome, too.
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