This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Solar Stocks That May Not Survive to 2014

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Suntech Power (STP)
Suntech Power shares are up 55% this month.

Suntech's Chinese solar peer LDK Solar (LDK) is usually held up as the poster child for excessive debt and bankruptcy risk in solar, and Simko agrees, but thinks that it will be important to watch Suntech income in the coming quarters to monitor its balance sheet situation.

"Suntech is the second worst," Simko said.

The Morningstar analyst said that there is widespread belief that the national prominence of Suntech's CEO Dr. Zhengrong Shi will keep the company in the good graces of the government. Something similar is said about LDK: that it has created so many jobs in China it can't be allowed to go bankrupt. While these arguments may be true, they don't ensure that the government and banks in China won't take over the companies and wipe out equity shareholders.

It's impossible to assess that risk, so Simko says an investor has to focus on what Suntech has promised in regards to its balance sheet when it reports in 2012.

The analyst noted that Suntech has talked up its ability to monetize its Global Solar Fund pipeline and reduce working capital and expenses, all of which could lead to $400 million or more in improved cash flow.

If that's true, then no matter what happens in solar, Suntech net debt stabilizes, at least.

"I'm skeptical that's how it plays out, but it will be a tell," Simko said. He added that Suntech could get an extension of credit facilities from existing Chinese bank partners if it's able to stabilize its balance sheet.

Suntech had approximately $946 million in cash and $3 billion in debt as of its last quarterly earnings report in November.

4 of 7

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs