China Sunergy Still Not a Safe Bet

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

I used to view China Sunergy (Nasdaq: CSUN  ) as one of the runts of the litter. Two years ago, I called it a stunted solar stock. Polysilicon shortages plagued the company in those days. With that burden lifted -- as current oversupply now weighs on poly equipment makers like GT Solar (Nasdaq: SOLR  ) -- China Sunergy looks sturdier today. Of course, the shares sit much lower than they did back then, so I don't feel like a total jerk for telling investors to steer clear.

This quarter, the company cranked out $80 million of revenue, a modest sequential improvement compared to what we saw out of sizzling shops like Yingli Green Energy (NYSE: YGE  ) and Canadian Solar (Nasdaq: CSIQ  ) . That sales number, over 85% of which came from solar cells, is about a third lower than last year's third-quarter levels. This, despite 60% higher shipments, totaling 54.4 megawatts.

How does that happen? Well, blended average sales prices were just 38% of last year's levels. With a collapse like that, it's fairly impressive that China Sunergy is still standing.

That said, I'm still not sure why investors are drawn to this solar shop. Does anyone really expect the solar cell business to become less cutthroat in the future? I suppose it's possible, if accommodative bank lending keeps Chinese players like Suntech Power (NYSE: STP  ) and JA Solar (Nasdaq: JASO  ) afloat long enough to grind other suppliers into the dirt through brutal price competition. China Sunergy is certainly in local lenders' good graces, having recently received low-cost financing from the Export and Import Bank of China.

This is my question for you, Foolish reader: What is the long-term competitive advantage of this company? If you have an answer, please share it in the comments section below. If not, I think the only sensible thing is to continue to avoid the stock, no matter how sunny the current solar reports may sound.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. Suntech Power is a Rule Breakers recommendation. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1047015, ~/Articles/ArticleHandler.aspx, 10/22/2016 12:15:16 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 14 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 3:39 PM
CSUNY $0.08 Up +0.02 +31.15%
China Sunergy Co.,… CAPS Rating: *
CSIQ $15.75 Up +0.05 +0.32%
Canadian Solar CAPS Rating: **
GTATQ $0.00 Down +0.00 +0.00%
GT Advanced Techno… CAPS Rating: ***
JASO $6.34 Down -0.13 -2.01%
JA Solar Holdings CAPS Rating: **
STPFQ $0.00 Down +0.00 +0.00%
Suntech Power Hold… CAPS Rating: *
YGE $3.96 Down -0.06 -1.49%
Yingli Green Energ… CAPS Rating: *