On Friday, I bought shares of solar cell maker Solarfun (NASDAQ: SOLF) not because I think solar is a great business these days -- I do -- but because the company's stock showed exceptional strength on Friday, closing at a new high. And it did this smack in the face of short sellers who are betting on lower stock prices and, perhaps more importantly, after consolidating nicely over the past few weeks.
At Friday's closing price of $28.76, the stock is still $3 off its all-time intraday high of $31.80, but this strong close tells me there's the potential for further upside, no matter how many people refuse to believe it. Strong earnings/guidance, a new big time investor, and this sector's new-found popularity (as I noted in this article) and a whole lot of hype have helped this stock double from the low teens in November (along with other surging solar plays like Canadian Solar (NASDAQ: CSIQ), First Solar (NASDAQ: FSLR) and JA Solar (NASDAQ: JASO).
The majority of market commentators advise investors to stay away because the price surges are mania-esque, valuations can be argued as stretched, the solar industry has capacity issues, and most importantly, they don't want to risk losing their jobs or getting sued after some beginner investor loses his or her life savings by thinking these stocks could triple again within a month. I agree; while this sector is certainly not for everyone, I've made millions playing these volatile stocks. So take it from someone who's seen this thousands of times before; while there's upside, stocks that move this quickly on speculative news can also come crashing down even quicker -- as investors in LDK Solar (NYSE: LDK) learned the hard way -- if and when the pendulum reverses.
But Solarfun is no LDK -- at least not yet -- so while I don't believe this stock will triple again anytime soon, I do believe it will retest its highs in the low $30s and possibly breakout further, especially if it can remain in play (as evidenced by high trading volume). That's why I give it a speculative buy rating for those with high risk tolerances like me!
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, the star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund.
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Reader Comments (Page 1 of 1)
12-23-2007 @ 8:10PM
sofia Moore said...
Notwithstanding the suggestion of corruptive and unethical manipulation of LDK SOLAR , the December 21, 2007 outcome and stock depreciation would have not occurred.
Investigation is mandatory as there exists significant evidence that suggests malice as well as violation of parameters established to prevent such manipulation intended to secure market control.
Clearly, there are questions implicating lack oversight and due dilligence that demand and authorize independent review of the LDKsolar downward spiral.. Accountability is imperative in such matters.
In view of the related testimony and facts outlined intervention is mandatory. There exists ample evidence to suggest the publishing of colaborative inaccuracies, that public access to false declarations and contradictions impacted an irrerviersable deprecaction which otherwise would have been non-existant and therefore avoided.
Legal measures, addressing the serious violation of standards and procedure guaranteed are being procceded and counsel sought.
In reviewing significant information pertaining to accusations from a broad and significant range of widespread reliable sources and in actual examination of data and pertinent facts therein, there remains the very serious issue of lack of oversight, bias in integrity and standards of ethics in media representation.
Evidence suggests a series of a strategic, purposeful focused orchestrated and executed criminal unlawful acts.
The consequences of such manipulation are far reaching and question the impact of aggressive parties influencing policy.
Therefore, in view of the above mentioned issues surrounding LDKSolar without doubt, we uphold the recommendation for an immediate and rgent independent inquiry and authorative review of the evidenc brought forth , the suggestion of violation of regulatory framework and the suggestion of malace and manipulation.
12-25-2007 @ 5:41PM
H. Zia said...
I agree Sofia. LDK got played by big players and was mainpulated based on short interest of these big organizations.
Every one could smell the foul play ... but instead no one tried top comment openly. Thank you for bringing this issue to the table.