On Jan 22, Zacks Investment Research upgraded solar photovoltaic ("PV") module manufacturer Trina Solar Limited (TSL) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Trina Solar has been witnessing rising earnings estimates. In fact, over the last 90 days, current quarter estimates have narrowed from a loss of 4 cents per share to a gain of 4 cents a share. Again, current year estimates have narrowed from a loss of $1.55 per share to a loss of $1.19 per share. This has helped Trina Solar to earn a Zacks Rank #1, further underlining the company’s solid position. Notably, it delivered a positive earnings surprise of 177.78% during the third quarter of 2013.
After eight straight quarters in the red, Trina Solar returned to profit in the third quarter of 2013, a turnaround driven by impressive trade in panel shipments. Panel shipments doubled year over year to reach 774.6 megawatt (MW), propelling revenues higher by 84% to $548.4 million.
Following two years of plummeting prices, stable equipment costs have helped to maintain steady margins for the industry’s main players. Again, this was also helped by rising Asian demand. China, in particular, announced motivating plans to install as much as 12 gigawatt (GW) of PV in 2014, as per a media report. The country is expected to account for approximately 30% of Trina Solar’s total shipments for 2013, up from just 13% in 2012.
In the wake of environmental concerns, alternate energy sources are gradually gaining prominence worldwide. The universal availability of sun rays, decreasing cost of PV units and a higher conversion rate make solar power technology one of the most popular alternate energy resources.
Moreover, Chinese solar cell producers are looking for new markets due to increasing competition in North America. The Japanese government has set a target of producing 28 GW of solar power by 2020 to replace its idled nuclear power. So, the Chinese producers can also look towards the Japanese market to increase sales volume. Thailand is also an emerging solar market in South East Asia.
Other Stocks to Consider
Besides Trina Solar, other companies in the same sector that are worth considering include First Solar Inc. (FSLR), JinkoSolar Holding Co., Ltd. (JKS) and SolarCity Corp. (SCTY). While Fist Solar sports a Zacks Rank #1, JinkoSolar and SolarCity carry a Zacks Rank #2 (Buy).
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