Trina Solar (TSL) Showing Signs Of Being Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Trina Solar ( TSL) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Trina Solar as such a stock due to the following factors:

  • TSL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $72.9 million.
  • TSL has traded 3.8 million shares today.
  • TSL traded in a range 213% of the normal price range with a price range of $2.35.
  • TSL traded below its daily resistance level (quality: 30 days, meaning that the stock is crossing a resistance level set by the last 30 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on TSL:

Trina Solar Limited, an integrated solar-power products manufacturer, engages in the design, development, manufacture, and sale of photovoltaic (PV) modules worldwide. The company provides mono- and multi-crystalline silicon ingots, wafers, cells, and related products. Currently there are 2 analysts that rate Trina Solar a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Trina Solar has been 4.3 million shares per day over the past 30 days. Trina Solar has a market cap of $926.2 million and is part of the technology sector and electronics industry. Shares are up 170.3% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Trina Solar as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.49 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, TSL has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TRINA SOLAR LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TRINA SOLAR LTD is currently extremely low, coming in at 11.62%. Regardless of TSL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TSL's net profit margin of -7.63% significantly underperformed when compared to the industry average.
  • TRINA SOLAR LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TRINA SOLAR LTD reported poor results of -$3.76 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings (-$1.60 versus -$3.76).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 63.5% when compared to the same quarter one year prior, rising from -$92.10 million to -$33.65 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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