We have all watched the volatility in the solar markets over the past 6 months. With extremely inflated PE ratios and price swings that effect the whole industry, it a difficult market to follow. I have chosen JASO as my solar stock to watch. JA Solar Holidngs Co. LTD. is well positioned in the Chinese market as 2008 begins to comes to a close. The company is exhibiting consistent earnings growth quarter-to-quarter with 4th quarter, '07 gross profit at $222.7 million and 1st quarter '08 at $235.86. I believe JASO will continue this trend into 2009 due to the minimal amount of debt on its books and the massive amount of equity it controls. The company is planning on utilizing that equity to expand on its current production capacity. The company currently has seven solar cell manufacturing lines with a capacity of 175 MW. The company has stated that by year-end 2008, their production capacity will increase to 425 MW, almost tripling their output. The company has previously expanded their output from 75 MW to 175 MW from 2006-2007 while they saw their revenue increase from $13 million to $116 million. If their guidance is correct, an expansion from 175 MW to 425 MW singles another sharp increase in revenues. They have secured contracts for 2008 of 325 MW from their existing customers. Many believe that solar stocks are going to be under pressure due to the possible subsidy cuts in Spain. While this will effect many within the solar industry, it will have a minimal effect on JASOs earnings. The company's primary business is conducting within China with 98% of their sales in 2007 being domestic. The Chinese government has stated that it is dedicated to a renewable energy initiative and believe this creates a bull market domestically for JASO. I'm looking for the stock to hit $21 dollars within the next two weeks, but much of this depends on their earnings call tomorrow. The company has consistently beaten Street estimate every quarter since its IPO and I see this trend continuing at least until 2009.
$15.37 (08/11/08)
