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Investing in Chinese Solar Stocks

Written By Nick Hodge

Posted April 3, 2009

China is giving money away.

And getting your share has never been easier.

Like the U.S., China recently announced a stimulus with incredible benefits to the alternative energy industry.

Investors in the know have already taken two rounds of easy profits — one on the U.S. package and, just recently, one on the Chinese announcement.

But there’s much more to come, and I’ll get to that in a minute.

For now, take a look at what you missed if you didn’t heed my advice in last week’s issue about Chinese solar stocks:

chinese solar stocks 2

Here’s what I had to say about that group of stocks last week:

World governments -as we’ve just seen- are busy coiling the spring for solar’s success, and investors are clearly taking notice. You need to stake your position now, and at the right price, to be ready when it pays off.

If you heeded my advice you might’ve doubled your money in the past week.

Those willing to move their money from the sidelines back into the action have already recouped some of the severe losses of the past few months. In fact, this March offered the best stock market performance of any month in the last six years.

Such is the nature of the current beast.

It’s emotional and irrational. . . far different from markets in the past. But it’s times like this in which big profits are made.

To clarify, traditional market indicators are out the window here, and have been for awhile. Investors have been trading on hopes, fears, intuition, and anger. Bull or bear, your sense of the market isn’t grounded like it used to be.

That’s why announcements like the U.S. and Chinese stimuli create such large runs, even before investors know exactly where the money is going.

And that’s where expertise comes in.

Emotions, Expertise, and Actions

The current market is one of actions.

Governments and regulators are taking actions everyday. TARP was an action. The stimulus was an action. Reducing lending rates is an action. Loosening accounting rules is an action.

And the market reacts to each one differently, for better or worse.

Yesterday, for example, the financial sector rallied thanks to now-famous accounting changes made by the Financial Accounting Standards Board. Trading for 10% or better yesterday should’ve been easy, provided you’re intimate with the financial sector and their price ranges of late.

Of course, I use that only as an example. But the same applies when dealing with energy.

Just as savvy energy investors profited from the $104 billion "green" section of the U.S. stimulus, which was riddled with support and incentives for wind and solar, so to is the Chinese version creating fortunes.

And that’s because, as I said earlier, China is giving money away.

The solar subsidy in their stimulus offers a 20rmb per watt discount on the cost of solar panels for new installations.

You may not know how serious the implications of that are. . . but you soon will.

A 20rmb per watt discount translates to $2.92 per watt. Thing is, solar panels are only selling for about $2.70 per watt right now.

So the Chinese government is about to pay 100% of the panel costs for installation. They are giving away money and guaranteeing solar profits for you.

This is where the expertise comes in. You have to be familiar enough with the Chinese subset of solar stocks to profit. And that’s not something I can teach you in one article.

The emotional aspect comes in because you have to anticipate how traders are going to react. This is also a topic I touched on last week:

You see, a 40-60% jump across an entire sector in just a few days equates to nothing more than a closet love affair. It means The Street is brimming with anticipation for a cleantech resurrection, exploiting and overbuying any positive piece of news.

Lesson: solar stocks are itching to rise, and investors and governments alike are itching to make it happen.

I’d say those statements have been verified — as you saw in the 1-month chart above.

But here’s the chart that should get you really excited:

chinese solar stocks 1-year

It’s the same five Chinese solar stocks, only pulled out to 1 year. Even with recent 60% runs or better, these stocks are still down as much as 70% over the past year.

They’ll double. . . and even triple as they rebound — and as China picks up 100% of new panels costs.

Are you ready to take action?

Call it like you see it,

nick hodge


P.S. Readers of Alternative Energy Speculator are already taking action. We capitalized on March market madness with nine winning plays. . . and six of them came from Chinese solar stocks. We’re loaded up for the next run, sitting on seven other winners just waiting to be cashed out. But you have to play to profit. Click here to start today.

P.S.S.  I’ll be at the Renewable Energy Finance Forum – Wall Street getting the inside scoop about global cleantech stimuli and related financing.  This is the premier event if you’re interesting in ivesting in cleantech.  Click here to learn more of folllow the banner below.


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