3SOF

Sorry if this doesn't belong here David. I'm not sure you saw it posted the other day. A little about Sun Power SPWR, if you're still interested in another solar stock. TSL still looking good also.

Quote from: BigSully1 on March 30, 2007, 12:20:20 PM
Regarding solar stocks, there was a mention in yesterdays IBD about San Jose, Ca based Sun Power, SPWR.

IBD says it is climbing the right side of a seven week consolidation, riding just below it's Feb. high of 47.98. Went public 11/05, turned profitable 06. 24 analcysts, consensus is for 90% growth this year. earnings growth 800% in Q4 and stepped up in each prior 4Q's against year earlier losses. Consensus is 375% earnings growth for Q1. IBD says RS and A-D registered new highs in last week. Maybe  another good one to watch.

Some interesting articles;

http://biz.yahoo.com/seekingalpha/070312/29269_id.html?.v=1

http://biz.yahoo.com/seekingalpha/070320/30022_id.html?.v=1

http://blogs.wsj.com/energy/2007/03/08/throwing-dollars-at-the-sun/

Yes, SPWR looks quite interesting BigSully1, I'll try to take a more in depth look at it before tomorrow's open.

We got our bullish breakout on TSL yesterday! This is a sign of "no heavy dilution going on", or the stock would have probably broken down. The next stop is the all time high at $50.94.

For tomorrow's update I'll apply my new valuation model to TSL to see what we get, given today's fundamental trends.

I'll keep holding TSL.

I read the information that TSL had 87% of revenues coming from Germany and 100% from Europe, but after all it isn't quite like that (ok, now I see those were 2005 numbers), as we can see on the following table taken out of TSL's IPO prospect:



It is still amazing how this Chinese company with production in China has 88.9% of its revenues coming from Europe.

I'm eager to get the 1st quarter results to see if there was any increase to the latest share count of 2,172,564,728 ordinary shares, or 21,725,646 ADS, made in December 31st, 2006. I'll extrapolate the increase I get for the 1st quarter 2007 to the full year and get the "dilution factor" for TSL from that estimate, so it better not be too high. At the initial video analysis that justified this investment, I estimated a dilution factor of just 1.03 per year, on average, but I fear that's too low. We'll just have to wait for the actual 1Q 2007 results to find out.

Over the following updates we'll work to get the other three working variables of my new valuation model, the revenue CAGR, net profit margin and estimated earnings multiple.

I'll keep holding TSL.

We still don't have information about the expected dilution factor, but the chart below isn't one of a company that is diluting

I've decided to build the model with the limited information we have:



Ok, given the four estimates I have on the model, the share price CAGR is 28.1% and the optimal selling price now is $72.93. Let's check the context of those four variables:

1) As for the dilution factor I maintained the 1.03 estimate. I'll adjust this estimate as soon as we get the 1st quarter numbers;
2) I put 2 as the revenue CAGR, but probably this is too conservative, even though it seems such a high number (it means 100% revenue compound annual growth rate). How come this number can be conservative, you ask. Well, because revenue grew 319.8% in 2006 from 2005 levels. If this growth pace were to continue, the revenue CAGR estimate would then be 4.198, and that would make TSL's estimates and corresponding share price shoot to the moon. But 2006 growth came from a very small base, and I don't expect it to be maintained. We'll refine estimates when we get the Q1 numbers.
3) As for the net profit margin estimate, perhaps I'm also being conservative, since I'm expecting it to decline to 10% from the current 11.82%, and that shouldn't happen as revenue grows. I need to check the historical (even though there's not much history) net profit margin over the next updates to refine this estimate;
4) The 27 EPS multiple estimate seems consensual to me, since 27 is the Semiconductor - Specialized industry average (hmm, I don't think TSL is well inserted in this industry, it should be more like Alternative energy, don't you think?)

You can see my estimates are on shaky ground here, but it seems there's more room for upside than for disappointment. The market agrees, as the stock closed at a new all time high yesterday.

I'll keep holding TSL.

Q1 results for TSL are near now, I should keep holding the stock and wait for those numbers to refine estimates, since there isn't much financial history to make comparisons (the company's IPO was just last December).

I'll keep holding TSL.

Nothing new on TSL today, as I need to keep waiting for Q1 results to refine estimates some more, since TSL's financial history is quite limited. The chart points North.

I'll continue holding TSL.

I think JASO is worth a look, has better margins then TSL and is profitable. I have not done any analysis but was wondering if David can look into JASO.

Quote from: stocky on April 13, 2007, 02:43:05 AM
I think JASO is worth a look, has better margins then TSL and is profitable. I have not done any analysis but was wondering if David can look into JASO.

I put JASO on my note book to cover early next week, since today I don't have time due to personal reasons. Monday I expect to restart covering three new stocks per trading day, and JASO will be one of the firsts.

The current valuation model for TSL is the following:



With the current fundamental information and the estimates I derive from the limited publicly available information about TSL (since it is such a recent IPO stock), the share price CAGR I get is 23.7% and the optimal selling price is $66.73.

(there was an error in a formula in the previous model calculation, fortunately this didn't have a dramatic impact on results).

I'll keep holding TSL, as I wait for the Q1 2007 results that hopefully will allow me to refine these estimates that are based on shaky ground, due to the lack of historical information on TSL.

David, if TSL reaches $66.73 before quarterly report, will it be an automatic sell?

Quote from: realcoolhead on April 13, 2007, 04:16:14 PM
David, if TSL reaches $66.73 before quarterly report, will it be an automatic sell?

Well, I'm not happy with one of my estimates on TSL, and that is the EPS multiple. It should be higher, and now that I mention it, as incredible as it may seem, the Semiconductor - Specialized industry average earnings multiple jumped from 27 yesterday to 42.93 today:
http://finance.yahoo.com/q/co?s=TSL

This will change the share price CAGR and the optimal selling price by a good amount (to the better), I don't think we'll be able (or willing) to sell TSL before the Q1 earnings release that will shed new light into my forecasting efforts.

Now that I saw this change I got curious on how Yahoo Finance calculates these industry averages.

Anyway, I'll run the model for TSL with this new EPS multiple estimate when I update the analysis on all holdings.

Nice to see you

And now I see 27 again on the link I just provided you

Definitely, the industry average, at least the way Yahoo calculates it, probably isn't the best way to forecast the future EPS multiple. I wonder which way that might be?

As I go deeper on these issues I'm getting to the conclusion that I need a model to forecast each one of the four variables of the major model. The more I know, the more I need to know

I think this helped TSL to move up quickly this week :

ADRs of Chinese Companies Mixed After Shanghai Index Hits All-Time High but Ends Lower


NEW YORK (AP) -- U.S.-traded shares of Chinese companies were mixed Friday, after the benchmark Shanghai index hit an all-time high but ended the day lower.
Chinese investors sold to lock in profits from a nine-day winning streak. The Shanghai Composite Index slipped 0.4 percent to 3,518.27 points Friday, after hitting an all-time high of 3,563.86 during the session.

Analysts expect more selling pressure next week, as investors take a cautious stance ahead of the release of China's first-quarter gross domestic product data on Thursday.

great pick David 

Quote from: David Randolph on April 13, 2007, 04:47:04 PM

Quote from: realcoolhead on April 13, 2007, 04:16:14 PM
David, if TSL reaches $66.73 before quarterly report, will it be an automatic sell?

Well, I'm not happy with one of my estimates on TSL, and that is the EPS multiple. It should be higher, and now that I mention it, as incredible as it may seem, the Semiconductor - Specialized industry average earnings multiple jumped from 27 yesterday to 42.93 today:
http://finance.yahoo.com/q/co?s=TSL

This will change the share price CAGR and the optimal selling price by a good amount (to the better), I don't think we'll be able (or willing) to sell TSL before the Q1 earnings release that will shed new light into my forecasting efforts.

Now that I saw this change I got curious on how Yahoo Finance calculates these industry averages.

Anyway, I'll run the model for TSL with this new EPS multiple estimate when I update the analysis on all holdings.

Nice to see you

Considering what we've been discussing on this thread about TSL earnings multiple, I've decided to apply the number 35 for that particular estimate, and the model stays like this:



So, given these estimates that I believe are reasonable, TSL's expected share price CAGR is 32.2% and the optimal selling price is $86.5.

I'll keep holding TSL.

I'm in awe with TSL's bull power, up 17% yesterday

The valuation model continues to point $86.5 as the optimal selling price:



That's where I'll take profits, because I don't see how we can stretch estimates more to the positive side.

The expected share price CAGR went down to 25.3%, I hope momentum takes the stock up to $86.5 as quickly as possible, but I'm prepared to wait several months if I have to. For now I'll keep on holding TSL, already the second biggest gainer of the Main Portfolio.

It never feels good to take a 10% punch in the stomach like the one we had today on TSL, but we need to put things into perspective, we can't be more anxious now that TSL closed at $61.78 than what we were when the stock closed at $43.13, just a couple of weeks ago, can we?

Well, we feel more anxious now because we're humans. Jesse Livermore explained it quite well more than 80 years ago, in Reminiscences of a Stock Operator:

«The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you you hope that everyday will be the last day - and you lose more than you should had you not listened to hope - to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out - too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stocks the way the average man does.»

I'll stick to my estimates and forecasts:



TSL may very well go down some more to close the gap at $59, but I'll continue ignoring the short term fluctuations and will only sell at what I perceive to be the optimal selling price given the publicly known fundamental information: $86.5.