Canadian Solar (NASDAQ: CSIQ) develops,
manufactures and markets solar module products for the conversion of sunlight into electrical energy. Offerings include solar panels for residential and industrial use, plus customized modules that customers incorporate into their own products. The modules power such special-purpose devices as bus stop lighting systems and vehicle battery chargers. Canadian Solar is incorporated in Ontario, but conducts all of its manufacturing operations through six subsidiaries in China. The firm is actively involved in government projects to bring solar power to rural Chinese communities. Clients are distributors, systems integrators and manufacturers in North America, Asia and Europe.
The company pleased investors last week, when it reported Q1 EPS of 61 cents and revenues of $171.2 million. Analysts had been looking for 31 cents and $151.9 million. The CEO cited robust market demand, strong pricing and effective management of foreign exchange exposure for the successful quarter. Management also guided Q2 revenues to $185-$190 million, versus consensus of $167.62 million.
The CSIQ
share price popped on the news and has since been defining a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with two "strong buys", one "buy" and "four "holds". Analysts expect a 64% growth rate, through the next year. The CSIQ Sales Growth rate (879.41% yr/yr) and EPS Growth rate (-0.14 to 0.61 yr/yr) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 30% of the outstanding shares. Over the past 52 weeks, the stock has traded between $6.50 and $48.91. A stop-loss of $37.30 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.
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