Perhaps the Gods are smiling on Suntech for 2010. Given the last two days, and the overall optimism surrounding solar companies based in China. STP closed trading today at $17.47 a share, up a decent $.50 for the day.
Yesterday, Barclays Capital decided to upgrade Suntech. STP did moderately well. Then today, the house of Thomas Weisel Partners also upgraded STP. The reason? Very simply, improving market conditions.
That's the trend right now. As we head into the holidays and then into 2010, it looks as though solar stocks are getting a fresh look. It particularly seems as though solar stocks based in China keep getting a larger percentage of the news coverage and the general focus.
If you take the coverage of First Solar out of the equation, it would be very interesting to see how much of CNBC's time is spent covering Chinese solar firms as opposed to US based manufacturers. 2010 might be the year where we see China truly come to dominate the manufacture of green (both solar and wind) industrial products. This would make sense, since Asian nations have a very strong tendency to take control of manufacturing of almost any industrial, mechanical or consumer machine in nearly any industry.
We've seen it time and again. Whether it's the automobile, the vcr, cell phones or computers, or any other number of machines or devices. Asia, and lately it's more like China, has proven they can either take over an industry or become a major player within it. This is what's happening to the solar cell manufacturers. While US firms are surviving or seeking financing, several of the Chinese manufactuerers are getting ready to explode their production.
Just like other Chinese producers, Suntech has a substantial unfair advantage. In addition to all of their success and sales abroad (Europe and US) Suntech also has a ready buyer of product in the nation of China itself. With a quickly growing green market at home, ready access to research and development funds and talent, and all financing needs assured, Suntech is sitting pretty.
Just like all solar stocks, STP has been quit brutalized over the last two years. To demonstrate this, just look at the numbers. Despite the fact that STP is up over 45% this year, the stock is still trading below $20 on the NYSE. And less than two years ago (Jan of 2008) the stock was trading between $82 - $88.
This is the opportunity. STP is up on the year and has been inching higher very slowly the last few months in a choppy market. The whole of solar seems to be getting a second wind as 2010 comes on. And most importantly, it looks as though China will be getting a strong jump in 2010. This is somewhat an anecdotal statement. But look at the numbers and the news, and see who is getting the buzz as 2010 comes in.
Look at the brokerage houses giving upgrades to Suntech and other Chinese producers, like JA Solar. The energy and focus is going to form around Chinese firms as we come out of the recession. They have the low cost of production, the unfair advantage and overall they have the vibrancy. It's not to say that First Solar and US producers won't do well, too.
But just like so much else these days, China has the edge. Consider STP a buy for 2010.
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