Friday, November 9, 2007

Bookkeeping: Initiating JA Solar (JASO) Position

Posted by TraderMark at 11:33 AM TweetThis
I will write more late and edit this entry but I am beginning a position in JA Solar (JASO) on absolutely stellar results. JA Solar is in a similar place to LDK Solar (LDK) on the food chain, and a reason I really liked LDK Solar - however LDK has the accounting issues. If JA Solar's results are a precursor LDK Solar should have blow out earnings, but until these audit results come back there will be an overhang on the stock. LDK Solar without accounting issues is probably a $80 stock. That said, I thought the results in JA Solar were outstanding and despite polysilicon pricing issues - JA Solar was able to maintain 23% gross margins which is solid. THe stock had run up ahead of earnings yesterday and along with the First Solar hoopla - so todays pullback to the upper $50s provided a nice opportunity.

I am out of cash now so I was considering First Solar at $200 but went with the 'less extended' stock technically, although operationally First Solar has the better situation. More later.

Long JA Solar in fund; no personal position

Posted by TraderMark at 11:33 AM Comments (2) | Edit This Post | Create A New Post

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2 comments:

fortune8 said...

Hello Mark,

Just wanted to get your opinion on TSL. Of all the solars, what made you chose this one? Valuation?

I was surprised to see JASO took a huge hit this morning on the earnings. But then the run up has been huge.

November 9, 2007 12:55 PM  
TraderMark said...

Yes, valuation and it has capacity to improve on things such as efficiency and gross margins since its becoming a more integrated player. With that said, the stock is below where it was before last quarter while the sector is on fire so I exited TSL and will await earnings to see what all the companies report.

As for JA Solar - the usual fear about gross margins is creeping out from analysts. Now I wonder why they did not worry about Sunpower which has far worse margins than JASO - but now they come out and worry about it for JASO. Strange. The only issue with JASO is they are building all that they can, and need to expand to sell more so that could be a weight in the near term, but operationally they are doing very well.

As for TSL I have not liked the price action this quarter so I am staying cautious and in general this sector has run so much its hard to get behind many of the names I liked before like Suntech Power. All very expensive. FSLR is the only stock now without margin issues but its the most expensive of the lot.

November 9, 2007 4:03 PM  

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