Please ensure Javascript is enabled for purposes of website accessibility

Chinese Solar vs. U.S. Solar: Where's the Smart Money Going?

By Kapit all – Updated Apr 6, 2017 at 11:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What do institutional investors think of these trends?

In recent years, the Chinese solar industry has done more than give Europe and the U.S. a run for their money -- the red giant has now surpassed both, with its companies now accounting for half the world's production of solar panels.

Unwilling to settle for second best, the U.S. passed the American Recovery and Reinvestment Act in 2009, restricting the purchase of foreign-made materials by stimulus money. Just two weeks ago, Obama signed a defense appropriation law banning the Pentagon from buying Chinese solar panels -- and it's likely not the last "buy American" initiative we'll see.

Just as the battle for solar supremacy appeared on-course for an all-out arms race, reports emerged that the Chinese government would be placing new restrictions on its solar industry's growth. And right now, this is looking like a potential godsend for the American market.

In their efforts to expand, many Chinese solar companies took on massive amounts of cheap debt, proving effective, but ultimately an unsustainable industry model.

Chinese regulations to curb outsized expansion may help reduce the concerns of oversupply in the near term, and the global solar sector may benefit from the stability over the coming months. However, if China's restrictive measures are kept in place for too long, U.S. solar stocks could see a golden opportunity to win back some of the market share they lost.

But don't be so quick to cash out your Chinese solar stocks -- the industry is hardly down for the count. With low earnings multiples and a commitment to reducing operating costs, they still make for an attractive value to many investors.

It's tough to say which superpower will emerge victorious in the quest for solar dominance. So we're wondering, what do institutional investors think of these trends? Since they have the resources to get the foreign intel we can't, it could be useful to pay attention to their trades.

We collected data on institutional flows to see if they prefer Chinese or American solar. We also collected performance data to provide more context. (Click here to access free, interactive tools to analyze these ideas.)

Institutional data sourced from Reuters, performance data sourced from Finviz.

Chinese Solar Companies:

Company

Performance Over Last Quarter

Institutional Transactions

China Sunergy (Nasdaq: CSUN)

-2.22%

Institutional investors currently own 10,662,175 shares vs. 10,678,296 shares held three months ago (-0.15% change)

JinkoSolar Holding (NYSE: JKS)

-13.40%

Institutional investors currently own 2,887,890 shares vs. 2,871,463 shares held three months ago (0.57% change)

ReneSola (NYSE: SOL)

-11.70%

Institutional investors currently own 30,322,139 shares vs. 30,063,836 shares held three months ago (0.86% change)

Solarfun Power Holdings (Nasdaq: SOLF)

-16.94%

Institutional investors currently own 18,312,784 shares vs. 17,910,472 shares held three months ago (2.25% change)

Suntech Power Holdings (NYSE: STP)

0.00%

Institutional investors currently own 57,523,840 shares vs. 57,877,946 shares held three months ago (-0.61% change)

Trina Solar (NYSE: TSL)

-2.58%

Institutional investors currently own 53,776,949 shares vs. 51,792,310 shares held three months ago (3.83% change)

Yingli Green Energy Holding (NYSE: YGE)

-0.69%

Institutional investors currently own 63,213,459 shares vs. 64,874,076 shares held three months ago (-2.56% change)

  • Average Quarterly Return of Chinese Solar Companies: -6.79%
  • Average Change in Institutional Ownership of Chinese Solar: +0.60%

U.S. Solar Companies:

Company

Performance Over Last Quarter

Institutional Transactions

Energy Conversion Devices (Nasdaq: ENER)

-9.73%

Institutional investors currently own 22,469,462 shares vs. 22,436,053 shares held three months ago (0.15% change)

First Solar (Nasdaq: FSLR)

12.27%

Institutional investors currently own 63,967,227 shares vs. 62,735,969 shares held three months ago (1.96% change)

Hoku (Nasdaq: HOKU)

-11.07%

Institutional investors currently own 2,521,051 shares vs. 2,534,253 shares held three months ago (-0.52% change)

SunPower (Nasdaq: SPWRA)

-1.18%

Institutional investors currently own 51,912,464 shares vs. 51,351,035 shares held three months ago (1.09% change)

  • Average Quarterly Return of U.S. Solar Companies: -2.43%
  • Average Change in Institutional Ownership of U.S. Solar: +0.67%

Conclusion: U.S. solar companies may have outperformed their Chinese counterparts over the last quarter, but institutional investors aren't showing a particular preference at the moment. What do you think? Use these lists as a starting point for your own analysis.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.


Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

First Solar is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

First Solar, Inc. Stock Quote
First Solar, Inc.
FSLR
$129.85 (-1.46%) $-1.92
Hanwha Q CELLS Co., Ltd. Stock Quote
Hanwha Q CELLS Co., Ltd.
HQCL
ReneSola Ltd Stock Quote
ReneSola Ltd
SOL
$5.12 (-0.97%) $0.05
JinkoSolar Holding Co., Ltd. Stock Quote
JinkoSolar Holding Co., Ltd.
JKS
$53.65 (-2.83%) $-1.56
China Sunergy Co., Ltd. Stock Quote
China Sunergy Co., Ltd.
CSUNY

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
339%
 
S&P 500 Returns
109%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.