A shell-shocked economy, spiraling debt at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic never helps investors, it's still a good idea to play devil's advocate with investments from time to time.
In Motley Fool CAPS, more than 135,000 members have weighed in on nearly 5,300 stocks, sharing bullish and bearish opinions alike.
Consider solar wafer maker LDK Solar (NYSE: LDK). The stock has had a big run in the past three months, but in Motley Fool CAPS, a significant number of the 1,371 members weighing in on the company still offer reasons to be bearish. I've already plucked out some of the common bullish rationale backing LDK Solar today, so here are three counterpoints, courtesy of CAPS.
1. Damaged credit markets: Lack of credit is still putting pressure on the solar industry, and the effects are being felt by suppliers like Energy Conversion Devices (Nasdaq: ENER) and GT Solar, and even wafer makers like LDK. Analysts and investors alike are skeptical that any solar company's performance will improve until the financial environment improves significantly.
2. Continued writedowns: Inventory charges plagued LDK and other solar players like Trina Solar (NYSE: TSL), JA Solar (Nasdaq: JASO), and Suntech Power (NYSE: STP) in the fourth quarter. LDK kept with the trend with another writedown in the first quarter, and capped it off with a loss of $22.5 million in the quarter compared to earnings of $49.8 million last year. Given the grim financials, some investors are finding it tough to be optimistic.
3. Bad outlook: To add to the dismal first-quarter solar earnings reports, some investors still see a challenging future despite some signs of hope. While Solarfun Power (Nasdaq: SOLF) may have called a bottom in solar, LDK, Suntech, and ReneSola (NYSE: SOL) all recently gave gloomy outlooks for the months ahead. ReneSola cut its revenue forecast for the year and LDK sees continuing weak margins, at least in the near term.
Of course, LDK Solar has survived despite dozens of obstacles in the past. But CAPS is such a great resource to determine whether the company will ultimately shine.
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.
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