Solar Stocks Pop in Early 2014 Rally

NEW YORK (TheStreet) -- Solar stocks are continuing what they started in 2013, rallying to new highs on the second trading day of the new year.

China-based Yingli Green Energy (YGE) is leading the group, soaring 4.3% to $6.55 on Friday, adding to an overall 29.1% over the past two days. ReneSola (SOL) isn't far behind, climbing 3.1% to $4.06 over the day's session. Trina Solar  (TSL) is following suit by gaining 1.3% to $15.18.

SOL Chart SOL data by YCharts

TheStreet Ratings team rates YINGLI GREEN ENERGY HLDGS CO as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate YINGLI GREEN ENERGY HLDGS CO (YGE) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. 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 analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio is very high at 12.34 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, YGE has a quick ratio of 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, YINGLI GREEN ENERGY HLDGS CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for YINGLI GREEN ENERGY HLDGS CO is currently extremely low, coming in at 13.64%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, YGE's net profit margin of -6.49% significantly underperformed when compared to the industry average.
  • This stock has increased by 93.72% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in YGE do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • YINGLI GREEN ENERGY HLDGS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YINGLI GREEN ENERGY HLDGS CO continued to lose money by earning -$3.13 versus -$3.32 in the prior year. This year, the market expects an improvement in earnings (-$1.39 versus -$3.13).

TheStreet Ratings team rates RENESOLA LTD as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate RENESOLA LTD (SOL) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 154.7% when compared to the same quarter one year ago, falling from -$78.61 million to -$200.25 million.
  • The debt-to-equity ratio is very high at 5.54 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.45, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, RENESOLA LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RENESOLA LTD is currently extremely low, coming in at 14.68%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SOL's net profit margin of -47.76% significantly underperformed when compared to the industry average.
  • RENESOLA LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, RENESOLA LTD reported poor results of -$2.80 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings (-$0.79 versus -$2.80).

TheStreet Ratings team rates TRINA SOLAR LTD as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate TRINA SOLAR LTD (TSL) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio of 1.37 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 0.70, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The gross profit margin for TRINA SOLAR LTD is rather low; currently it is at 15.21%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, TSL's net profit margin of 1.80% is significantly lower than the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
  • 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 (-$1.17 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 117.2% when compared to the same quarter one year prior, rising from -$57.46 million to $9.90 million.

 

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