Friday, February 18, 2011

Solar: Susquehanna Says Sell the Chinese Names, Still Likes First Solar (FSLR; TSL; JKS; LDK)

Susquehanna's parent company, Susquehanna International Group is probably the largest privately held options trading firm in the world.*
Susquehanna Financial had a pretty decent call on FSLR last November, links below.

Balance sheet factors don't move stocks on a day-to-day basis but over time they rule. Period.
It's not rocket surgery.

Here's an example we posted in August 2007. It's from a popular history for crying out loud, William Manchester's "The Arms of Krupp":

Liquidity in Business and Markets

''Liquidity is expensive but illiquidity is much more so,
because it destroys the very existence of a firm"
I don't remember if it was Johannes or Ernst, it was a long time ago that I read Manchester, quoting one of the Schroeder boys on the insolvency of Krupp. That line has stuck with me. Here's the book.

From Investor's Business Daily:

Solar stocks have been among the best-performing industries this week. Many top-ranked stocks in the group are near buy points from bases.

But the industry holds a comparatively weak ranking, No. 90 in Thursday's IBD, and many of its companies suffer from weak fundamentals.

China-based stocks such as Jinko Solar (JKS), Trina Solar (TSL), Daqo New Energy (DQ)and LDK Solar (LDK) are all teed up in cup-with-handle bases. JA Solar (JASO) and Yingli Green Energy (YGE), also Chinese companies, are in cup bases.

The top-ranked U.S. solar stocks are already past buy points. GT Solar (SOLR) cleared a cup-with-handle base in January. ReneSola (SOL) topped a cup with a low handle on Feb. 2. First Solar (FSLR) cleared a cup without handle on Jan. 24.

Mehdi Hosseini, with Susquehanna Financial Group, differentiates U.S. and Chinese solar stocks by their balance sheets.

"The majority, if not all Chinese companies, have been burning cash for the past three to four years to add capacity and to show revenue growth," he said....

...He has a sell rating on Trina Solar and Jinko Solar. He doesn't cover LDK. If he did, he says, he would have a sell rating on it as well.

He rates First Solar a buy. The Arizona-based company has increased exposure to the smaller, but more predictable, U.S. market. It has also built a backlog, buying up large-scale solar construction projects to which it can begin selling a portion of its production....MORE
*See Options: "Beating the Odds - Susquehanna International - Jeff Yass"
Nov. 19
First Solar Gets Some Love from Susquehanna, Price Target $180 (FSLR)
Repost: More on the First Solar Initiation by Susquehanna, Likes Dec. $125 Calls (FSLR)