I truly hope next week brings us a different result. We are currently involved in CSUN, FSLR, and KKD. Each position has held up in the market’s fifth straight day of declines because they are solid investment opportunities. Monday morning, CSUN is going to report earnings. The company has gotten no love moving into earnings like other solar companies, so I will continue to hold this and expect big things for it. FSLR is only down 1.5% for us, so there is no reason to take that loss. KKD is at the 3% stop loss area right now. If this was just a random one day decline, I would say let’s give up on this position. We have held this through three straight days of red. On a green day, this will soar. Let’s hope that is Monday. We are holding all. I will only stop loss KKD if it gets to 5.30 or below.
Since everything has taken quite a hit, there are some compelling midterm trades moving into next week and we will also finish the Longterm Rating Report setup on 1-2 more of our current positions. We have transferred all of the old Longterm Positions into Ratings now, so it is time to start on some new Ratings. If you have an idea…post below.
Midterm Trade of the Day: Suntech Power Holdings Co. (STP)
Analysis: Why do I continue to be sucked into solar plays? They always fit my criteria and scanning process because they are opportunities for growth from unneeded undervaluation. Suntech Power is the latest victim of my Midterm Trade. The company is slated to report earnings on Wednesday morning, and they look very strong for major growth moving into earnings. The company is slated to report earnings around 0.23 EPS vs. 0.16 one year ago.
What do I tend to want to see in a Midterm Trade? A stock that is undervalued or has dropped into the point where we are going to enter the stock equipped with a lot of potential and market reasoning behind why it should rise. .png)
Suntech has a lot of both. The stock has dropped 7% since the beginning of this week, which has pushed it into some undervalued levels.
The stock is reporting earnings on Wednesday. Every single solar company that matters has reported thus far has beaten expectations and forecasted well. Suntech is in line to do the same, yet the difference is that STP is not overvalued and had a 10% runup into earnings (yet!). Starting next week, Suntech will have the catalyst of China Sunergy’s (CSUN) report on Monday and its own earning report. Additionally, the company will have its own earnings history to help back itself up. The stock one year ago reported over 100% profits surprise.
Additionally, the company in the last quarter took a major one-time loss, but they abandoned the awful thin film line that was plaguing the company’s profitability. With a full focus on silicon PV cells, the company should be expecting better margins, outlook, and profitability. In the past month, the stock has gotten three upgrades and has not seen any results of it. Analysts believe that the stock proposes significant risk/reward with such low valuations. The stock’s P/E is a whopping 15, and it is about to have a huge recovery after earnings from last quarter’s debacle.
This looks very solid moving into earnings. It will be very nice to exit this, FSLR, and CSUN early next week for significant gains!
Entry: We are looking to get involved at 8.60 – 8.70.
Exit: We are looking to exit for a 3-5% gain.
Stop Loss: 4% on bottom.
Good Investing,
David Ristau
