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Why Trina Solar Limited (ADR) Popped 14% in December

By Travis Hoium - Jan 4, 2016 at 6:00PM

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The ITC had solar stocks popping last month, but Trina Solar was up for a different reason entirely.

What: Shares of solar manufacturer Trina Solar Limited (ADR) (NYSE: TSL) jumped 14.2% in December after getting good news about U.S. subsidies and an offer to take the company private.

So what: A lot of solar stocks were up big in December on news that the U.S. solar investment tax credit was going to be extended. The 30% investment tax credit should boost demand for solar panels and help hold prices steady or even move them higher in years to come.

But Trina Solar's big jump was mid-month after getting an offer of $11.60 per share to take the company private. The offer came from CEO Jifan Gao and Shanghai Xingsheng Equity Investment & Management Co., Ltd. and it was a non-binding offer, so we still don't know whether it will turn into a completed deal.  

Now what: We don't know if the offer is legitimate or not, but with the ITC extension and expected global demand for solar expected to grow, I see a buyout as more likely than it was a month ago. Trina Solar has managed to stay profitable in a highly competitive solar market, and with panel prices stable, there should be potential for profit growth.

I wouldn't jump into shares simply because of the buyout offer, but if you're bullish on the solar industry (as I am) and want to own one of the better-positioned Chinese manufacturers, Trina Solar is a decent option. There should be growing demand over the next five years and even a buyout at the offer price of $11.60 would give investors a slight upside from where shares are trading in early 2016.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

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