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The shares of Suntech Power Holdings Co. Ltd. (STP), first discussed here on July 28, 2009 at a price of $19.24, certainly are not for squeamish investors.The shares continue to exasperate -- falling further in the second quarter and coming very close to the $8 sell/stop loss. STP's low so far in 2010 has been $8.43. The shares have recently rebounded, rising back above the psychologically-significant $10 level, but the stock remains decidedly in the high-risk category.
Underscoring: I consider Suntech to be a high-risk stock not suitable for low-risk/moderate-risk investors.
The stock's status noted, I still expect Suntech's 2010 revenue to surge 30-40% on increased customer demand and better financing arrangements. Meanwhile, China's solar subsidy program, as well as U.S. government initiatives to invest in renewable energy, should continue to stimulate sector growth.
Other positives: Suntech's size and knowledge of the U.S. market give it an advantage over solar peers.
The First Call FY2010/FY2011 EPS estimates for STP are 56 cents to 77 cents.
Still, the solar sector remains a quintessential high-risk zone: Uneven technological change, a shifting public policy landscape, and changes in the price of primary competing fuels create an investing zone that's not for the squeamish.
2010 Outlook: I view Suntech as a long-term play, but if investors are looking to sell STP within the year, it's probably best to avoid the shares, as the solar sector is subject to continual and large changes in objective conditions, making a 1-year investment window inherently risky.
Stock Analysis: I consider Suntech Power Holdings Co. Ltd. to be a high-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in STP now. Under any circumstance, I wouldn't buy more than 25% of my STP position before September 2010 and I'd put a sell/stop loss at: $8.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Other positives: Suntech's size and knowledge of the U.S. market give it an advantage over solar peers.
The First Call FY2010/FY2011 EPS estimates for STP are 56 cents to 77 cents.
Still, the solar sector remains a quintessential high-risk zone: Uneven technological change, a shifting public policy landscape, and changes in the price of primary competing fuels create an investing zone that's not for the squeamish.
2010 Outlook: I view Suntech as a long-term play, but if investors are looking to sell STP within the year, it's probably best to avoid the shares, as the solar sector is subject to continual and large changes in objective conditions, making a 1-year investment window inherently risky.
Stock Analysis: I consider Suntech Power Holdings Co. Ltd. to be a high-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in STP now. Under any circumstance, I wouldn't buy more than 25% of my STP position before September 2010 and I'd put a sell/stop loss at: $8.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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