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If you're looking for a beaten-down name in the solar sector that could be a great January Effect trade, then take a hard look at
Hanwha SolarOne(HSOL), a manufacturer of silicon ingots, photovoltaic cells and PV modules. It also provides PV cell processing services and PV module processing services. This stock is down huge in 2011, with shares off by over 88%.
This stock is currently trading about 6 cents off its 52-week low of 99 cents. This is another beaten-down penny stock that has come all the way down from its
52-week high of $9.78 to its current level of $1.05 a share. This is another January Effect candidate with an extremely low float of just 22.28 million shares. The bears control 3.26 million of those shares through short positions. If the January Effect kicks in for HSOL, then this stock could easily experience a big short-squeeze.
My trading plan for HSOL is to buy the stock off any weakness and simply use a mental stop that's around 10% below that recent low of 99 cents a share. You could also buy off strength and get long on a breakout over $1.15 a share on high volume. Look for volume on that breakout that's tracking in near or above its three-month average action of 858,961 shares. Target a run back toward the 50-day moving average of $1.66, or possibly even higher.
I also featured Hanwha SolarOne earlier this month in "
5 Stocks Under $10 With Big Upside Potential."