Canadian Solar (CSIQ) Marked As A Dead Cat Bounce Stock

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.

Trade-Ideas LLC identified Canadian Solar ( CSIQ) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Canadian Solar as such a stock due to the following factors:

  • CSIQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.2 million.
  • CSIQ has traded 53,556 shares today.
  • CSIQ is up 3.9% today.
  • CSIQ was down 5% yesterday.

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More details on CSIQ:

Canadian Solar Inc., together with its subsidiaries, designs, develops, manufactures, and sells solar wafers, cells, and solar power products worldwide. The company operates in two segments, Module and Energy. CSIQ has a PE ratio of 6. Currently there are 5 analysts that rate Canadian Solar a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Canadian Solar has been 2.3 million shares per day over the past 30 days. Canadian Solar has a market cap of $1.8 billion and is part of the technology sector and electronics industry. The stock has a beta of 3.76 and a short float of 8.3% with 1.83 days to cover. Shares are up 23% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Canadian Solar as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, attractive valuation levels, solid stock price performance and compelling growth in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • CSIQ's very impressive revenue growth greatly exceeded the industry average of 5.0%. Since the same quarter one year prior, revenues leaped by 84.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CANADIAN SOLAR INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 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 1521.2% when compared to the same quarter one year prior, rising from $3.78 million to $61.33 million.

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