The first week of June wasn’t a good week for American capitalism. It’s not that the economy is suffering, which it is, but it’s what happened in China. Timothy Geithner, the U.S. Treasury Secretary, went to speak at Peking University, which is the most prestigious college in China. Geithner had actually been an exchange student there nearly 30 years ago.
The embarrassing part came when he said that China’s investment in U.S. dollars was safe. What was the response for the students?
Laughter.
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That’s right. They laughed at him. Think about that for a moment. A U.S. Treasury Secretary tells a group of students in a communist country that he supports a strong dollar, and they can’t take it seriously. This is even more surprising since students in China tend to be very respectful.
I have to admit that I can hardly blame them. The Chinese understand what many Americans don’t — that the U.S. government has been fiscally irresponsible. Geithner basically admitted that as well. At least Geithner was courteous to his hosts by crediting current signs of improvement in the global economy to the early measures taken by China. The key fact is that China is leading the world economy out of a recession.
That’s exactly why I’m such a big of Chinese stocks. It’s a trend that every investor needs to understand. Today, I want to share with you one of my favorite Chinese stocks. This company that combines two of the most important trends in the world today — the emergence of China and green technology.
This Green Energy Stock Turns Sunlight Into Electricity
China’s Yingli Green Energy (YGE) makes photovoltaic cells and other solar energy components that turn sunlight into electricity. The company has an annual production capacity of about 600 megawatts-worth of equipment. Yingli Green Energy is one of the few companies in China involved in all stages of photovoltaic manufacturing, sales and installation, which gives it the ability to profit from green energy from start to finish.
Despite being based in China, more than 90% of Yingli’s sales come from Europe, primarily from Germany and Spain. This caused the company to take a hit in the first quarter, when Yingli Green Energy lost $20.7 million or 16 cents per share, compared to $32.3 million or 25 cents per share in the same quarter a year ago. During the same period, its sales declined 37.5% to $146.3 million compared to $234.1 million.
This news shocked the stock market, but not me.
Here’s the catch: The company said it believes the first quarter marked a low point for the solar industry this year, and I agree. That makes now a tremendous time to jump into Yingli at the bottom and ride it up to the top. Shares of YGE are still less than half of their all-time peak price.
Yingli’s Chairman and Chief Executive, Liansheng Miao, said the company is seeing “recent gradual recovery” in major markets, including Germany, as well as what he called “encouraging government policies” in the U.S. and China, which give the company “reasons to remain confident in the future of the global solar market.”
Yingli Green Energy is an excellent buy and a very aggressive play for 2009.
Louis Navellier did not have any holdings in Yingli Green Energy at the time of publication.
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