Revenues for solar power company have been growing quickly especially for two Chinese companies, Suntech Power Holdings Co (STP) and Solarfun Power Holdings Co (SOLF). Both of these solar companies manufacture and market a variety of photovotaic cells and modules — the main components for solar panels to convert sunlight into energy. To be honest the science is beyond me, but the numbers for these companies add-up and add-up big.
Last week Suntech Power Holdings Co (STP) released its 2ndQ Earnings report with spectacular revenue growth figures. On August 20, 2008 Suntech reported a gain of 53% in revenues vs. 2ndQ ‘07 with its $480.2 million in sales reported for 2ndQ ‘08. The previous quarter in 1stQ ‘08 Suntech also gave very strong revenue growth figures with an intake of $434.51 million which represented a 76% increase vs. its 1stQ ‘07 revenues the year before. That’s quite impressive and the market agreed. On that day, Suntech (STP) stocks rose $4.62 from $37.13 at open to $41.75 at close to gain 12.4% in just one day. Suntech continued to rise in the following days and closed today (8/25) at $45.97. I don’t think it’s too late to get in for Suntech, but I did want to mention the other opportunity which might be a little more tantalizing.
On August 27, 2008 Solarfun Power Holding Co (SOLF) will release its 2ndQ ‘08 Earnings report which will likely be quite similar to Suntech’s success. The latest figures available show that Solarfun (SOLF) reported $135.23 million in revenue for 4thQ ‘07 which represented a whopping increase of 322% vs. 4thQ ‘06. During 4thQ ‘07 Solarfun’s shares quickly rose from $10 to a near $40 by Jan ‘08. Since then the stock had dropped and is now currently trading at about $19.99 (close on 8/25). Solarfun and Suntech tend to follow the same trend in share price. When Suntech stock prices rise, Solarfun’s prices rise shortly after. Below is a chart comparing the share pricese for both stocks in the past year. I think it clearly shows a mirror trend in price increases and drops.
In short you might want to keep an eye on Solarfun (SOLF) on August 27th. I predict the price will jump a good 10% on that day. But also be aware that these can be some very volatile stocks that can fall as quickly as they rise (see Jan-Apr ‘08 trend in charts above). If you like some risk in your portfolio — SOLF might be a good one to grab.
And that’s the Upside on solar.
– Jonah
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