Solarfun Power Holdings (SOLF) shares defining a bullish 'pennant'

Posted Dec 17th 2007 3:13PM by Larry Schutts
Filed under: Earnings Reports, Technical Analysis, Stocks to Buy

Solarfun Power Holdings (NASDAQ: SOLF) is a Chinese manufacturer of photovoltaic (PV) cells and modules. It offers monocrystalline and multicrystalline silicon devices and provides processing services to convert silicon wafers into PV cells. Customers are system integrators in Europe and China. Most sales are made in Germany, Italy and Spain.

The company pleased investors late last month, when it reported Q3 EPS of 17 cents and revenues of $100.6 million. Analysts had been expecting 5 cents and $76.0 million. Management also boosted 2007 revenue guidance from $250-270 million to $280-$300 million ($284M consensus). The Chairman remarked that pricing appears "quite strong" well into next year and noted that the firm has already secured a "significant portion" of its anticipated 2008 supply needs.

SOLF shares popped on the news and then moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the stock with four "holds". Analysts expect a 58% average annual growth rate, through the next five years. The SOLF Sales Growth rate (312.36%) compares favorably with industry, sector and S&P 500 averages. Institutional investors hold about 14% of the outstanding shares. Over the past 52 weeks, the stock has traded between $8.22 and $31.80. A stop-loss of $21.35 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

Tags: fundamental analysis, FundamentalAnalysis, momentum, pennant, Solarfun Power Holdings, SolarfunPowerHoldings, SOLF, technical analysis, TechnicalAnalysis