Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Chinese solar-module maker Trina Solar
So what: On one hand, Axiom Capital's Gordon Johnson warned that there's a new solar sheriff in town -- GCL-Poly Energy Holdings, which now boasts the lowest cost of production per watt of any solar company out there. That's mainly bad news for First Solar
Now what: At the same time this news was breaking, Italy got its credit rating downgraded, making everything just a little bit more expensive in that country -- solar projects included -- which can only dampen demand for Trina's modules. Also, the U.S. Trade Representative announced that it's considering a "major trade enforcement action against China." Details were not immediately revealed, but there have been rumblings about Chinese support for its domestic solar industry and its effects on U.S. solar shops. A move against China by USTR could affect Trina.
Add it all up, and you get 15% less market cap at Trina.
Did the market overreact or underreact to the news? Add Trina Solar to your Watchlist and find out.
Fool contributor Rich Smith does not own (or short) shares of any company named above. The Motley Fool owns, and Motley Fool newsletter services have recommended buying, shares of First Solar. We Fools don't 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.
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