One solar stock that has demonstrated how volatile solar stocks can be is Canadian Solar. CSIQ closed at just over $25.65 today. A look at their recent history is stunning...
In June of 2008 the stock price of CSIQ was trading at $47 a share. Then the melting of all solar stocks began in earnest. By March of 2009 the stock price was trading just over $3 a share. This seems hardly possible considering the company has had a sound business plan throughout the whole time. Earnings were a problem, customers were a problem, the overall market for solar product was in question.
But to fall to $3 per share? Down from $47 less than a year before. Just how much changed within the company for this to occur? The thing is there was not that much change. There was bad news and there was a downturn.
More than anything there was incredible pessimism. The investment community turned their back on this company due to substantial bad news and a substantially bad environment.
In just over a year from the $3 low, the company is up 800% plus. And again, you can ask yourself did the company change that much? Yes the situation improved in regards to revenues and customer base, but CSIQ still missed their 2009 guidance for revenue. Canadian Solar projected $800 million and came in below $665 million.
The point here is a quality company like Canadian Solar can be dumped in the market while the business continues to chug along. Canada is still big in solar. The US market is still alive, even if it trips a little. China is still tremendous and Europe is still kicking despite big setbacks. Canada announced a number of projects recently, and Canadian Solar is included in those contracts. The situation is definitely on sound footing even if it's not looking terrific.
Personally I look at the $25 price of CSIQ as a mixed bag. The company will most likely trend higher, and trading it to the $30 might not be a bad idea. At the same time the stock has come quite a distance from the low a year ago.
More than saying CSIQ is a buy for the long-term, I would say that Canadian Solar needs to be watched very closely. Let's watch to see how the company performs here over 2010. I believe it will have an upward bias that will be somewhat muted.
What is more important is to watch for another opportunity that took place in the last 13 months. This perfectly good company fell way too far. If the market takes another big hit or if solar stocks enter another big corrective phase in the next year, it would be a good idea to watch the stock price of CSIQ. This stock has already demonstrated very substantial volatility.
Canadian Solar may offer a strong profit for the future. Keep this stock on your list and watch it closely. If we get into a down market be patient. Nobody wants to catch a falling knife. But Canadian Solar, even trading at over $25 a share, is only a $1 billion company. There aren't that many shares out there if institutions and mutual funds go for the exits.
If CSIQ takes another big dip in the future (let's read that as under $10 a share) then it will be time to become a buyer. For those who are interested right now, I would say take a position but be ready to exit it quickly, probably between $30 - $35 before the end of 2010.
