3SOF

I wonder if these stocks will correct..

Their consolidations the past few days have been very tight, I thought they would've given more back when they finally slowed down a bit.  Anyway I think these stocks have much further to go in 08 but I don't know about the timing.  I'll plan on holding the 2/3 I have left.  It was just getting to be too ridiculously large of a holding and I had to take some of it off. 

Zacks update:

Full Analysis

Canadian Solar, Inc. (CSIQ), together with its subsidiaries, engages in the design, development, manufacture, and marketing of solar module products that convert sunlight into electricity for various uses. Its products include a range of standard solar modules to general specifications for use in various residential, commercial, and industrial solar power generation systems.

The company also designs and produces specialty solar modules and products based on customers' requirements. Its specialty solar modules and products consist of customized modules that its customers incorporate into their own products, such as solar-powered bus stop lighting, and complete specialty products, such as solar-powered car battery chargers.

In late-November, the company signed an annual solar cell supply contract with Taiwan-based Gintech Energy Corp. that will be worth about $60 million in 2008. Under the deal, Gintech will ship between 17 megawatts and 22 megawatts to Canadian solar starting in 2008. The contract includes fixed pricing and set delivery times, Canadian Solar said.

A few weeks earlier, the company said that its third-quarter profit more than doubled on sharp revenue gains and operational improvements. Net income rose to $522,000, or two cents per share, from $239,000, or one cent per share, a year earlier. Revenue rose to $97.4 million from $17.8 million. Analysts expected a loss of two cents per share.

"Our return to profitability was achieved through continued sales momentum, improved production yields, better inventory controls, improved cash management and stable pricing," Chief Executive Shawn Qu said in a statement. The company posted a loss of 11 cents per share in the second quarter as it spent heavily to increase production.

Additionally, CSIQ raised its full-year revenue outlook by $30 million because of strong demand and operational improvements. The company now expects revenue of $285 million to $295 million, up from an earlier forecast of $255 million to $265 million.

Earnings estimates have been on the rise. Just over the past month, 2008 estimates have risen 46 cents to $1.19 per share. The most accurate estimate shows over 15% upside for those earnings as well. Three out of the five covering analysts have raised their forecasts over the past month.

Bought back some of my CSIQ at 22.85, so I'm back to a pretty full position.  I think these stocks have rallies to new highs still.

I may have jumped the gun, there is surely a lot of turmoil currently.  But I know I want to have a pretty big position in this cheap solar stock and I'm willing to sacrifiice a few points to make sure I get in.

This is a bloody massacre, man!  Sucks to watch big time gains wash away.

Anyhow, I got longer CSIQ just now at 20.  This stock is simply worth more than this.  Read the last ER..I reread it last night and my confidence was restored.  I'll be happy to watch CSIQ drift lower, knowing I will likely be rewarded.  Well I won't be happy but it is okay.  This is my favorite stock for a reason and I need to remember that.  The fundamentals are amazing.

All the fundamentals are still in tact for solars, especially CSIQ.  I am keeping my eye on the prize, I think CSIQ is a $40 + stock, so I am loading up here even though it is painful.  I think there is some saying...best time to buy is when there is blood in the streets, or the best time to buy is when you think you should the least, something like that.  I must sound like an idiot.

Here is an important part of the ER, with parts highlighted that I really find interesting.


Net revenues for the quarter were $97.4 million, including $3.8 million of silicon material sales, compared to net revenues of $17.8 million for the third quarter of 2006 and $60.4 million for the second quarter of 2007. Net revenues for the second quarter of 2007 included $2.7 million of silicon material sales. Net income for the quarter was $0.5 million, or $0.02 per diluted share, compared to net income of $0.24 million, or $0.01 per diluted share, for the third quarter of 2006 and net loss of $2.9 million, or $0.11 per diluted share, for the second quarter of 2007. Excluding share-based compensation expenses of $2.4 million, non-GAAP net income for the quarter would have been $3.0 million, or $0.11 per diluted share.

Dr. Shawn Qu, Chairman and CEO of CSI, commented: "Q3 was another strong quarter for us as we achieved revenues above our guidance for the second quarter in a row. Our return to profitability was achieved through continued sales momentum, improved production yields, better inventory controls, improved cash management and stable pricing. As a result, we were able to increase our product shipments and improve our profit margins as forecast despite modest price increases in materials from some suppliers. Our second 25MW solar cell manufacturing line is now operating at full production capacity. In addition, we have completed the installation of our third and fourth lines, and expect to bring our total internal solar cell manufacturing capacity to 100MW starting next month. During the quarter, we also added new members to our Board of Directors and expanded our executive management team to help manage the next phase of our growth. Our strengthened supply situation and execution have led to increased confidence in our forecasts for revenue growth and margin improvement in Q4 and 2008."

Bing Zhu, CFO of CSI, noted: "As expected, our gross margins improved in Q3 due to the combination of continued sales growth and effective cost controls, as well as our increased in-house solar cell manufacturing capability. Our current progress in Q4 gives us confidence that we will be able to continue our pace of growth and profitability improvement in 2008."

...

Recent Developments

The construction of our new Changshu solar module plant is currently on schedule. We expect the new plant, which will have 24,000 square meters of production and training space, to open in January 2008, bringing our total annual solar module production capacity to 400MW.



    We have commenced work on two new projects:
    -- Expansion of our solar cell manufacturing capacity from 100MW to 250 MW.
       We expect to complete this project by the summer of 2008; and
    -- Construction of a solar ingot and wafer plant in the City of Luoyang,
       China.  We expect to complete Phase One of this project by the summer
       of 2008, which will give us an annual solar wafer capacity of 40-60MW.

Outlook

Dr. Qu continued: "We recently announced sales contracts in Spain, the U.S. and Germany, all of which are important solar industry growth markets. Customer demand remains strong and our operational structure is now much leaner. We are positioned for further growth as we demonstrate the successful leveraging of our operating model."

Based on current market conditions, our order backlog and our production capacity, we are increasing our prior guidance of net revenues for the full year 2007 to $285-$295 million from the previous guidance of $255-$265 million. The total annual shipments are expected to be about 80MW, including some OEM tolling business.

Net revenue for the fourth quarter of 2007 is expected to be $110-$120 million, with non-GAAP operating income, determined by excluding share based compensation expenses expected to be in the range from $8.0-$8.5 million. Shipments for the fourth quarter of 2007 are expected to be approximately 35 MW.

Based on current customer orders and market forecasts, we expect net revenue for 2008 to be $650-$750 million. The Company intends to continue its long-term supply chain strategy, which combines internal solar wafer and cell production and direct purchasing from a selected number of long-term strategic wafer and cell suppliers. The Company believes that it has contractually secured 90% of its silicon or cell requirements to support module production of 200-220MW in 2008. The Company continues to evaluate new technologies, including the use of metallurgical silicon (UMG) products, which, if successful, would have the potential to increase total shipments by 30-40MW in 2008.

So they are planning to ship 35MW in Q4, which will basically make up half of their output in 07.  And then a 100% + increase in MW output in 08.  Still LOVE this stock, as painful as the past couple weeks have been.

Quote from: bjc on January 15, 2008, 11:17:10 AM
This is a bloody massacre, man!  Sucks to watch big time gains wash away.

Anyhow, I got longer CSIQ just now at 20.  This stock is simply worth more than this.  Read the last ER..I reread it last night and my confidence was restored.  I'll be happy to watch CSIQ drift lower, knowing I will likely be rewarded.  Well I won't be happy but it is okay.  This is my favorite stock for a reason and I need to remember that.  The fundamentals are amazing.

All the fundamentals are still in tact for solars, especially CSIQ.  I am keeping my eye on the prize, I think CSIQ is a $40 + stock, so I am loading up here even though it is painful.  I think there is some saying...best time to buy is when there is blood in the streets, or the best time to buy is when you think you should the least, something like that.  I must sound like an idiot.

Here is an important part of the ER, with parts highlighted that I really find interesting.


Net revenues for the quarter were $97.4 million, including $3.8 million of silicon material sales, compared to net revenues of $17.8 million for the third quarter of 2006 and $60.4 million for the second quarter of 2007. Net revenues for the second quarter of 2007 included $2.7 million of silicon material sales. Net income for the quarter was $0.5 million, or $0.02 per diluted share, compared to net income of $0.24 million, or $0.01 per diluted share, for the third quarter of 2006 and net loss of $2.9 million, or $0.11 per diluted share, for the second quarter of 2007. Excluding share-based compensation expenses of $2.4 million, non-GAAP net income for the quarter would have been $3.0 million, or $0.11 per diluted share.

Dr. Shawn Qu, Chairman and CEO of CSI, commented: "Q3 was another strong quarter for us as we achieved revenues above our guidance for the second quarter in a row. Our return to profitability was achieved through continued sales momentum, improved production yields, better inventory controls, improved cash management and stable pricing. As a result, we were able to increase our product shipments and improve our profit margins as forecast despite modest price increases in materials from some suppliers. Our second 25MW solar cell manufacturing line is now operating at full production capacity. In addition, we have completed the installation of our third and fourth lines, and expect to bring our total internal solar cell manufacturing capacity to 100MW starting next month. During the quarter, we also added new members to our Board of Directors and expanded our executive management team to help manage the next phase of our growth. Our strengthened supply situation and execution have led to increased confidence in our forecasts for revenue growth and margin improvement in Q4 and 2008."

Bing Zhu, CFO of CSI, noted: "As expected, our gross margins improved in Q3 due to the combination of continued sales growth and effective cost controls, as well as our increased in-house solar cell manufacturing capability. Our current progress in Q4 gives us confidence that we will be able to continue our pace of growth and profitability improvement in 2008."

...

Recent Developments

The construction of our new Changshu solar module plant is currently on schedule. We expect the new plant, which will have 24,000 square meters of production and training space, to open in January 2008, bringing our total annual solar module production capacity to 400MW.



    We have commenced work on two new projects:
    -- Expansion of our solar cell manufacturing capacity from 100MW to 250 MW.
       We expect to complete this project by the summer of 2008; and
    -- Construction of a solar ingot and wafer plant in the City of Luoyang,
       China.  We expect to complete Phase One of this project by the summer
       of 2008, which will give us an annual solar wafer capacity of 40-60MW.

Outlook

Dr. Qu continued: "We recently announced sales contracts in Spain, the U.S. and Germany, all of which are important solar industry growth markets. Customer demand remains strong and our operational structure is now much leaner. We are positioned for further growth as we demonstrate the successful leveraging of our operating model."

Based on current market conditions, our order backlog and our production capacity, we are increasing our prior guidance of net revenues for the full year 2007 to $285-$295 million from the previous guidance of $255-$265 million. The total annual shipments are expected to be about 80MW, including some OEM tolling business.

Net revenue for the fourth quarter of 2007 is expected to be $110-$120 million, with non-GAAP operating income, determined by excluding share based compensation expenses expected to be in the range from $8.0-$8.5 million. Shipments for the fourth quarter of 2007 are expected to be approximately 35 MW.

Based on current customer orders and market forecasts, we expect net revenue for 2008 to be $650-$750 million. The Company intends to continue its long-term supply chain strategy, which combines internal solar wafer and cell production and direct purchasing from a selected number of long-term strategic wafer and cell suppliers. The Company believes that it has contractually secured 90% of its silicon or cell requirements to support module production of 200-220MW in 2008. The Company continues to evaluate new technologies, including the use of metallurgical silicon (UMG) products, which, if successful, would have the potential to increase total shipments by 30-40MW in 2008.

So they are planning to ship 35MW in Q4, which will basically make up half of their output in 07.  And then a 100% + increase in MW output in 08.  Still LOVE this stock, as painful as the past couple weeks have been.

bjc....

I would wait until the bleeding stops.  One thing...I've learned...is to never fall in love with a stock.  It's hard to do...but it's probably the best advice to adhere to.

These corrections can take time.  I've been watching to re-enter CSIQ...but after the break down after the first of the year...I knew it would take time to recover.  Right now it dropped below it 50dma.  Once the damage is done it can take a while to repair the technicals.  Let's hope it's not too long and of course the over all market isn't helping.

Solars are out of favor for now.  It can take time to become back in favor...which I think it will...but it may take a while.  Look at FSLR...STP...SPW...all broke below the 50dma.

Yeah, that's what I was realizing.  Oh well, I will just take the pain.

That ER is still the ER they released.  The market only remember the past 15 and next 15 minutes it seems.  I'll wait it out.  It sucks and it is totally bumming me out but I don't want to miss the train.  I think there are about 54 gazillion people short and it doesnt take much to have them all cover. 

I've traded this stupid and learned some lessons, but I'm not turning back now.  But yeah the solars are screwed for a while.  At least I'm just giving back solar profits rather than new money, but it hurts just the same.    owwwwwwwwwwwwwwww

Quote from: bjc on January 15, 2008, 12:01:41 PM
Yeah, that's what I was realizing.  Oh well, I will just take the pain.

That ER is still the ER they released.  The market only remember the past 15 and next 15 minutes it seems.  I'll wait it out.  It sucks and it is totally bumming me out but I don't want to miss the train.  I think there are about 54 gazillion people short and it doesnt take much to have them all cover. 

I've traded this stupid and learned some lessons, but I'm not turning back now.  But yeah the solars are screwed for a while.  At least I'm just giving back solar profits rather than new money, but it hurts just the same.    owwwwwwwwwwwwwwww

I hear ya man.  I'm down now on ASTI after being way up.

Well the ER date isn't until March...a long way off.  More reason for people to sell or short.  Anyway the whole Solar sector is down big today.  I'm hoping we're getting a capitulation day in the market....with the ratio of stocks up/down= 1/10.  We'll see at the close.  If we get a decent close we could be in store for a short term market rally.  Hopefully INTC doesn't disappoint after hours.

Yeah, I think everyone and their mother, brother, and cousins think the solars are going down to the next support level.

FSLR at 160, STP at 45-50, etc. 

When EVERYONE believes something, how often is it true?  I'd obviously want to buy at the bottom, but I'd rather buy on a drift down than on the way up.  But I didn't foresee this obviously.

I just think some people will take a step back, realize oil is still $90 a barrell, and start buying these stocks up.  Once you start adding some numbers together on CSIQ and if you believe their projections, then you'd be happy buying anywhere under $30.

They could make $1.50+ in EPS in 08.  For a high growth stock...you look at a PE north of 30 or 40, and you get to a pretty lofty PPS. 

But yeah I was bummed when I saw they report in early march.  A little bit less than 4 months after the last ER...

We'll see what happens.  It seems so obvious the solars fall to the next support level, but who knows.  Oil could have another run at $100 in it and that could give some people a reason to buy solar.  And the new pres of the US will likely be much more pro - alt. energy.


It seems I was en fuego for a while and could do no wrong, no its the complete opposite.  Anyhow I still feel good with all my positions, it just sucks to take a 25% haircut on total portfolio value.  Completely devastating!   On a sidenote, though, this same thing happened a couple months ago to me and I was considering selling everything at the bottom.  My port then went on a 50% rally in less than a month.     Ah the pain is killing me.

In retrospect, this should've been my buy zone.  Got to attached to this stock and just wanted to get some.  Hindsight is 20/20 as they say.

I wish I had waited to read the Q3 ER until tonight.  Oh well I still like this LT just feeling major pain right now. 

I didn't think the stock would find itself all the way down to this support zone...should've known, the street is heartless. Anyway if CSIQ can follow through with earnings we will still see much higher prices IMO.  If they announce $0.30 + then we see a lot of green.

Quote from: bjc on January 15, 2008, 01:17:25 PM
In retrospect, this should've been my buy zone.  Got to attached to this stock and just wanted to get some.  Hindsight is 20/20 as they say.

I wish I had waited to read the Q3 ER until tonight.  Oh well I still like this LT just feeling major pain right now. 

I didn't think the stock would find itself all the way down to this support zone...should've known, the street is heartless. Anyway if CSIQ can follow through with earnings we will still see much higher prices IMO.  If they announce $0.30 + then we see a lot of green.

Well bjc..I dabbled a little here.  These solar stocks have been taken to the woodshed....and there is the possibility of a "V" shape recovery... if the other solars cooperate.  Even though I usually expect a "U" recovery. 

The undervalued solars will soar and the others will lag.  I see CSIQ as the most undervalued.

Did you notice estimates were upped recently for  2008 EPS to $1.43??

Read the ER!  They made $0.11 before stock based compensation or whatever it is, and that was with barely any capacity.  I think we should get a blowout earnings report.

I have put too much in CSIQ..my portfolio is suffering.  But I have faith....you were definitely right when you said never fall in love with a stock though.  So true. 

Anyway looked like a decent reversal in the solars today.  Don't know if there will be any follow through but we'll see.  Still love CSIQ regardless of the price action.  I'd take this opportunity to buy some more but have too much already.  We'll see!  Also have some LDK getting killed but think its a $100+ stock.

fyi from seeking alpha:

Canadian Solar: Why Do the Best Solar Stocks Get the Least Coverage?
posted on: January 17, 2008 | about stocks: CSIQ   


It seems that most stories you read about companies in the solar space focus on First Solar (FSLR), Sunpower (SPWR) or Suntech Power (STP), all of which have PEs in excess of 50. Just like the sexy stocks of the dot-com era, these stocks are touted by some analysts without regard to normal metrics such as price-to-earnings or price-to-sales ratios, and without looking at other companies in the same space that may offer a better risk-reward ratio.

One can never predict the future, of course, and maybe I'll be proven wrong and these stocks will continue to run (after their ongoing correction is over), but I would rather invest my money in stocks with PE and P/S ratios closer to earth.

Case in point: Canadian Solar (CSIQ). This company makes conventional solar panels and specialty solar panels, which does not distinguish it from the crowd. What does distinguish CSIQ is that with a market cap of about $500 million based on yesterday's closing price of $17.90, and based on 2007 expected sales of between $265 and $290 million, its P/S ratio against 2007 sales is less than 2:1, while First Solar's P/S ratio--even after its recent 30% drop from its 2007 high--is about 30 against 2007 expected sales.

What is interesting is that FSLR's expected 2007 revenues are about $500 million, whereas CSIQ's expected 2007 revenues are about $275 million. Is there some logical reason that FSLR, with 2007 sales that are not quite twice CSIQ's, should have a stock price that is more than 10 times as much?

If you think the answer is based on 2008's expected revenues, you will be even more surprised because expected revenues for FSLR in 2008 are about $800 million, while CSIQ's expected 2008 revenues are between $650-750 million. In fact, the disparity in revenues almost disappears in 2008! So again, why should FSLR be touted by many analysts as being worth $200, $250 or even $300 per share while CSIQ trades at under $20/share?

Aha, you may think the answer is in the EPS numbers because revenues don't tell the whole tale, but EPS doesn't explain the 10-fold disparity either. Expected EPS in 2008 for FSLR is around $2/share, whereas it is between $1.20 to $1.60/share for CSIQ (depending on the source). So whereas CSIQ trades at a forward PE of about 15, FSLR trades at a forward PE of about 90.

Sure, FSLR has executed brilliantly so far, and its technology for making solar panels does not require silicon, but if these were the outrageous advantages that some analysts make them out to be, it should translate into outsized earnings--and as can be seen above, it has not. Sure, $2 per share is better than $1.40 per share, but it simply does not justify a 10-fold disparity in the value of the stock.

What this tells me is that if both these companies execute as expected, and assuming an "efficient" stock market, the stock prices of FSLR and CSIQ should be much closer at the end of 2008 than they are now--either because FSLR has remained flat or gone down, or because CSIQ has gone up, or most likely both.

Finally, whereas various authors have opined that "solar stocks" remain overvalued despite their recent correction, and that 2008 will be a bear (rather than banner) year for solar stocks, based on the above analysis, I think 2008 will be the year in which more sophisticated investors will look at the metrics of the various companies in this space and reward the ones with compelling valuations and PE and P/S ratios that would be reasonable for even non-solar companies.

Disclosure: The author does hold a position in CSIQ, but not in the other stocks mentioned in this article

Nice, this has been my basis for buying CSIQ and SOLF all along.  I just don't understand why these other stocks deserve sky high valuations.

STP is a true blue monster solar stock that is really cheap right now.  It is very fairly priced compared to the other ones mentioned in the article like SPWR and FSLR that have sky high valuations. 

LDK announced a big deal before the bell today.  Depending on how big of a problem the dilution as cited by David Randolph is, LDK should be a much more expensive stock.

This dilution is a bit high for my liking, but is expected with high growth stocks like this.  I'd rather they dilute me and build a 1600 MW production plant than not dilute me and keep the 400 MW plant they planned on, get my drift?

Anyway, decent day so far for solars.  If CSIQ goes below $15 in the coming weeks I'm going to put stupid amounts of my money in it and deal with the consequences if I'm wrong.  I think the chances of CSIQ being a $50 stock are better than the chances of it being a $10 stock.  I'm 23 years old...if I lose a fortune on CSIQ then that sucks but I've learned a valuable lesson.  But I think CSIQ should be much, much higher.  A little DD goes a long way, CSIQ should lead the charge back.  Along with SOLF which I don't own anymore but still like very much. 

I think FSLR may hang in this area for a while...

May need to look back into solar....

CSIQ: Banc of Amer Ups to Buy from Neutral; Sets Tgt @ $28; Analyst Notes
Wednesday, January 23, 2008 07:55ET
Issuer: Canadian Solar, Incorporated (NasdaqNM: CSIQ)
Analyst Firm:  Banc of America
Ratings Action: UPGRADE
Current Rating: Buy (from Neutral)
Target Price: $28.00
Analyst Comments: The firm is upgrading CSIQ to Buy from Neutral after a 34% decline YTD (vs. –11% for the SPX) amid concerns regarding the implications of higher module supply. Given its relative market position, they believe that CSIQ warrants a discount to industry leaders including FSLR and STP. However, they find shares of CSIQ compelling at 10x their FY08 EPS estimate of $1.86 given 1) strong visibility on FY08 results and 2) the potential for upside from CSIQ's foray into metallurgical silicon.