Bask in This Sunny China Trade

Jinkosolar Holding (JKS) is in the spotlight again


Just a few years ago, most everyone believed that China would be the biggest growth story fueling the global economy. Chinese stocks were on a huge roll, and making money buying Chinese infrastructure, luxury brand, and particularly solar stocks, was a surefire way to make serious profits. Then in 2011-2012, China’s economy began to slow, and that led many China haters to come out and proclaim the nation’s economy was headed for a diabolical hard landing.

Well, it’s now 2013, and over the past couple of quarters the economic metrics in China have been very strong. Sharp increases in PMI, as well as a trend higher in GDP growth, have essentially disproven the hard-landing crowd, and that means once again stocks pegged to China’s growth are a screaming buy. One stock recently in the news is in the aforementioned, and once extremely hot, solar sector.

Jinkosolar Holding (NYSE:JKS) is a China-based solar panel producer that’s seen its stock soar in Monday trade. As of this writing, the stock is up nearly 6% on heavy volume. China’s recently announced plans to increase solar-power installations 67% by 2015 as part of an effort to fight what truly is hazardous smog conditions in big cities such as Beijing is a big driver for JKS month. The company also is expanding rapidly, having just completed sales of six-year bonds worth 800 million yuan ($128 million) to fund its planned capital expenditures and for working capital. That news also brought buyers into this hot trading vehicle.

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The chart shows the uptrend since August, as well as the breakout in the shares in late-November and early December that launched shares above the 50-day and 200-day moving averages.

The flight higher for JKS since August has been truly impressive, as the shares have been bid up 275% over the past six months. This is a trend that shows no sign of slowing, and as such I think now is the time to jump on the JKS trade.

I suspect this stock can easily climb well above its 52-week high of $10.20, but even if the shares stop around there, that still represents a 28% surge off current levels. Buy this stock now, and I think your portfolio will get a nice 30% or more shine over the next four to six weeks. As always, you’ll want to be sure and set a stop-loss price between 8-10% below your buy price to ensure you don’t get caught in any potential cloudy trade.

As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.

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