Mark Bachman At Avian Securities: Solar Train Wreck Almost Over – Top Picks YGE, JKS, FSLR, DQ

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01:19:43 pm on September 8, 2011

About two weeks ago Mark Bachman of Avian Securities sent out a research report indicating that the train wreck taking place in the solar industry appears to be almost over and that he’s backing off his negative industry view a bit.

The recommended trading strategy is to focus on the best solar stocks with an intent to sell in Q4.  You could call it trading an oversold bounce.  The firm notes that it’s not recommending positions for the long term due to reliance on subsidies which continue to diminish.  I tend to agree with this strategy, but technically while solar stocks are showing some signs of at least stabilizing, they have not shown obvious signs that a bottom is in.  They way it could be played is to scale in slowly now with a small position and add more once there are signals that a big oversold bounce is in the works.  We still aren’t there.   That would be characterized by a few big volume buying days followed by quiet consolidation.  Bachman singles out Yingli Green Energy (YGE), JinkoSolar (JKS), First Solar (FSLR) and Daqo New Energy (DQ) as top solar plays. 

==> Click Here For Your FREE Daily Yingli Analysis

==> Click Here For Your FREE Daily Jinko Solar Analysis

=== > Click Here For Your FREE First Solar Analysis

==> Click Here For Your FREE Daily Daqo Analysis

Here are additional highlights of the report…

– Demand isn’t so bad and maintains 19 – 22GW view for this year
– Believes that module pricing is beginning to stabilize and will remain above $1.10/W.  Cell and wafer ASP declines have also slowed dramatically.
– Sees policy rhetoric ramping up late this year so selling positions ahead of late Q4 a good idea

– Recommends two short ideas

STR Holdings (STRI): lack of new customers and market share losses

Sunpower (SPWRA): poor visibility into business model, declining ASP’s, Tenesol acquisition dilutive

– Firm is more neutral on these and can’t recommend being short or long at this time..

Canadian Solar (CSIQ) & Hanwha SolarOne (HSOL): demonstrating low profitability due to external wafer and cell buying

Trina Solar (TSL): cutting prices to win market share

JA Solar (JASO): hit by rising costs and declining ASP’s

Renesola (SOL): decimated by weak pricing for wafer

 

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