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.
Click to EnlargeThe 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.