Growth Prospects and Depressed Stock Price Make LDK Solar a Buy

8/12 - "If there was a dark spot in the announcement, it revolved around gross margins. Although average sales prices were higher than most analysts expected, the cost of polysilicon (or poly) continues to be high. Gross margins came in at 25.4% which compares unfavorably to 27.7% last quarter and 35.2% a year ago. Management stated that they expect margins to continue to show weakness in the third quarter before rebounding in the fourth quarter and into 2009."

"Any delay in LDK’s plans to produce raw materials would likely be a disappointment to investors. But the positive side of this argument is that if production goes according to plan, the likelihood for further appreciation in the stock price is very good.

Demand for solar wafers continues to be strong even with decreasing subsidies out of Spain. It appears the private marketplace is ready to step in and pick up the slack in demand that may have been released last month. With lower prices on most solar wafer producers, there should be ample opportunities to pick up strong investments at discounted prices. I believe LDK is one of those opportunities."