Solar Stock Winners: Solar (Finally) Feeling the Love

NEW YORK (TheStreet) -- Long-term and short-term bullishness were evident in the best solar stock performers on Monday.

LDK Solar (LDK) surged on Monday by 20% on the strength of a fourth quarter earnings pre-announcement that exceeded Street revenue consensus. LDK also released revised guidance for 2011 that exceeded its previous revenue and business targets across polysilicon, solar wafer, cell and module production.

At the same time, SunPower (SPWRA) shares surged by 8.8%, after the U.S. solar company announced more 711 megawatts in projects sold to Southern California Edison and slated for development from 2014 to 2016.

>>Solar Winners: SunPower's Winning Day

For LDK, the bullish news about the fourth quarter performance and 2011 outlook run counter to lots of solar supply chain noise about recent prices decline, particularly at the level of solar cell manufacturers. Indeed, another report in Digitimes on Monday stated that the gross margins of Taiwan-based cell makers could fall below 10% in the first quarter of 2011, with cell pricing per watt falling below the $1.20 mark at which many cell manufacturers break even.

Hapoalim Securities reported on Monday that channel checks in Europe show module pricing down by 5% to 10% in the first quarter -- $1.55 to $1.60/watt.

It should be noted that both LDK and SunPower are among the large group of solar stocks that remain favorite targets of shorters -- and, therefore, any positive news, particularly bullish earnings pre-announcements, will lead to a round of short covering.

LDK trading volume was huge on Monday, with more than 20 million shares changing hands on Monday, and gain of 20% for the Chinese solar stock. Typical volume for LDK is in the range of 3.6 million.

There were 15.8 million shares short on LDK as of the most recent Nasdaq short interest report on Dec. 15.

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