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 photovoltaic module producer Trina Solar
So what: Deutsche Bank analyst Vishal Shah noted that solar panel inventory levels in Germany are at record low levels and that these low inventories could create a sense of urgency to install before an expected 15% subsidy cut in July. He also said in the same note that solar companies would likely report losses in Q4, but, with estimates already low, many have a shot at outperforming if his thesis on Germany proves true.
Now what: The solar sector hasn't been able to catch a break for a while so it's nice to see them finally have a day in the sun. However, I no longer share the same optimism that Vishal Shah clearly has for the sector. I still see the need for either a bankruptcy or consolidation wave to sweep through the sector to eliminate a glut of competition and truly stabilize pricing. Trina Solar isn't one of those companies I expect to go away and its future does look bright, but I'm not ready to give the company my full endorsement until the outlook for the entire sector improves.
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