Canadian Solar Inc. (NASDAQ: CSIQ) has been a big runner, but there is a management change worth noting. This week it said that it expect shipments of about 190 MW to 200 MW, with a gross margin of about 14.5% to 15.5%. This is affirmed guidance but at the higher-end of prior guidance. Unfortunately, the company also announced a CFO change with immediate effect. The company might want to feel lucky that m
ore flags were not raised over such a key management change despite a solid replacement being named and despite the ex-CFO staying on in an advisory capacity. Watch the charts here as the stock may have hit a double-top here around the $16.50 mark. Shares were down at $11.00 in August. The big concern here in trying to call any top at all versus peers is that volatility is no stranger as the 52-week trading range is $8.99 to $33.68. While the rise is muted to some of the smaller players, that recent move up comes to a 45% rise in two-months.
If you go into the smaller cap names, there are many other huge winners as well as the sector has been on fire. Deals are being signed and orders are holding up and coming on better than expected. Evergreen Solar, Inc. (NASDAQ: ESLR) ran up more than 27% to $0.92 on Tuesday on its new display and on new team members. Ascent Solar Technologies, Inc. (NASDAQ: ASTI) also ran over 23% to $5.66 on new modules being announced for remote power. Even the Guggenheim Solar ETF (NYSE: TAN) has participated in the keen rally. The solar ETF was flirting with $7.00 back in August and the rise in component companies has lifted its shares to $8.75 today. That tallies up to a 25% rise in a short period.
The end may not come immediately and it would not be safe to expect a sudden bubble burst. Valuations used to be excessively higher than at the current time. This is also a big week for solar energy as the “Solar Power International” conference is taking place at the Los Angeles Convention Center all week. More deals from smaller and larger companies alike are probably assured throughout the week. Orders are holding up even if industry-wide margin pressures are still present in a highly competitive solar market.
Calling a top in a hot sector is always a tough call and the first calls are often premature. Momentum stocks can stay on fire for far longer than many guess and the valuations in the sector are actually not astronomical as they were back when we had an oil and energy bubble in 2008. Solar stocks are often thought of as leveraged energy trades, so you know what happens to these when you get rising oil and a rising stock market. By now you’ve also probably figured out what happens when those trends no longer act as a magnet.
JON C.OGG
