Expecting Solarfun to Beat Q1 Estimates

by: The Correct Call posted on: May 19, 2008 | about stocks: SOLF    

Solarfun Power Holdings (SOLF) is set to report earnings prior to the market open on Wednesday, May 21st. Solarfun is a leading global manufacturer of solar technology.

SOLF is expected to earn .15 cents per share for its 1st quarter of 2008. The most recent solar stock results lead us to believe Solarfun should announce earnings and revenues that will beat investors’ and analysts’ expectations.

The latest solar stocks to report earnings blew past expectations:

ReneSola (SOL) saw its sales triple and handily surpassed Wall Street’s expectations.

Canadian Solar (CSIQ) reported earnings of .61 cents per share while analysts thought Canadian would check in at .31 cents.

These exceptional results are probably what led Citigroup analyst Jim Liang to tell clients that “solar fundamentals are currently very strong, with the rising tide lifting all boats.”

When Solarfun’s shares have risen into earnings, the stock has lifted off in the days following its earnings announcements. Similar sizzling performance from SOLF could lead to explosive upside in SOLF’s share price as 35% of its float is sold SHORT.

Even if Solarfun’s report card falls a bit short of its peers, we feel SOLF’s shares are reasonably priced. Considering SOLF’s triple digit growth rate, a forward PE of 18 times 2008 expectations and a current Price to Sales Ratio of 2.5 seem relatively inexpensive to us.

Our short term outlook is buoyed by more than Solarfun’s earnings prospects, history of post earnings POPS, potential short squeeze and fair valuation.

Our analysis of SOLF’s chart is exceedingly optimistic. As you see in SOLF’s chart below, a recent spike in volume, acceleration in the stock price and the MACD breaking free from a 6 week consolidation to cross above zero all converge to bring The Correct Call to one conclusion: The stock has every reason to move a lot higher if management delivers the goods on Wednesday morning.

Disclosure: Author has a long position in SOLF

This article has 7 comments! Add yours below...

The Correct Call

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This article has 7 comments:

  •  
    Ace22
    May 19 08:56 AM
    i strongly agree cc!
  •  
    gebby
    May 19 09:09 AM
    My Website
    the commentary is a little late. the chat points to 26 and it is there this morning. most people saw it as it broke up past 17 last week. but thanks for the analysis.
  •  
    tessant
    May 19 09:29 AM
    My Website
    based on the stock action, i also agree
    but could it selloff after?

    -scott
    solarfeeds
  •  
    investorsliv
    e
    May 19 10:33 AM
    My Website
    great move so far on SUFR this AM again, if they dissapoint... this will crater.. if they meet I don't think its going to really move much since its already up quite a bit

    www.investorslive.com/.../
  •  
    retireyoung
    May 19 04:31 PM
    What does this mean?
    "Similar sizzling performance from SOLF could lead to explosive upside in SOLF’s share price as 35% of its float is sold SHORT."

    New to the market and just curious what "35% of its float is sold SHORT" means and how it's good for the stock price. Thanks in advance!
  •  
    lazzybum
    May 20 12:01 AM
    This stock has a bunch of doubters. If it moves above $30 on Tudesday, I'll sell at least half of my holding. There is always a ggod chance that the shorties will pile on once some institutions start to take profit. I believe I can buy it back below $20 later.
  •  
    The Corret
    Call
    May 20 09:55 AM
    My Website
    Retire Young:

    A good place to read up on short selling:

    www.investopedia.com/t...
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