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[Beginning of
Cramer's
verbatim
comments for
this segment...]
Jim:
I've been a real
hater... When it
comes to Chinese
solar stocks...
in fact you can
say I've been a
notoriously
b-i-g playa
hater... to cite
that late
lamented stock
guru and word up
magazine
reader... and
I've
consistently
told you to stay
away from the
Chinese solar
plays.. and I
don't just hate
the player... I
hate the game...
as I'm very
skeptical of
owning any
individual
Chinese stocks
despite the fact
that I
acknowledge the
supremacy of
Chinese
communism in all
things
capitalist...
but no matter
how much I tell
you to stay
away... even
though I have
been dead right
to stay away...
you home gamers
keep calling me
about the
Chinese solar
stocks...
In response the
Cramerican party
line has been at the
only solar stock you
want is
First Solar (FSLR)..
the only solar
company that doesn't
need subsidies
because it can make
money generating
solar power on its
own... in fact we
just learned form
this morning's
Boston Globe that
First Solar is
building a new plant
in France... yes I'm
not backing away one
second from First
Solar here... but I
am making an
alteration in my
little red book...
not to be confused
with
Jim Cramer's Real Money: Sane Investing In An
Insane World...
available at
bookstores near
you...
And by the way this
is the Chinese
version... the
Chinese Ministry of
Finance in its
infinite wisdom...
announced a plan to
dole out huge
subsidies for solar
projects on
Tuesday... the
people's republic
will subsidize 50%
of the capital cost
of solar
installation in
urban areas... 70%
with additional
assistance coming in
the form of low
interest rate
loans... Something
that's especially
important as the
Chinese Solar
Industry has been by
the lack of
available loans...
ever since the
credit crunch
began.. this is the
kind of massive
subsidy that I can't
ignore... especially
when it comes from
the Chinese
government... which
is proving so adept
at stimulating
various parts of its
economy... the
government expects
to subsidize more
than 500 megawatts
of solar projects in
the next 2 to 3
years... and this
new program is on
top of a host of
other solar
initiatives.. I
guess you could say
they want to let 100
solar panels
bloom...
I'm calling this a
malice act of
remonstration on my
part... I'm now
willing to recommend
not 1, but 2 of the
most legitimate
Chinese solar
stocks... legitimate
should have had
quotes around it..
the ones that should
be most effected by
this program... but
it is purely on a
speculative Friday
basis... they are
and this is tough
for me to say
because I do not
like these...
Yingli Green Energy Holding
Co. (YGE)
and
Suntech Power (STP)
with the symbol like
NASCAR... these are
two of the larger
players in the
Chinese solar market
with lots of
installation
experience and
extensive networks..
which is why I think
they are in position
to benefit the most
from the subsidies
and government
finances... and even
though both stocks
were rallying hard
in anticipation of a
program like this...
and then rallying
harder still when it
was announced... I
believe they have a
lot of upside... if
you're willing to
take the risk...
We've been on a roll
here when it comes
to speculative
plays... how about
our Tech specs
stocks that I
recommended the week
of May 4th...
Tekelec (TKLC),
Brocade Communications (BRCD),
Cadence Design Systems Inc.
(CDNS),
ON Semiconductor Corp. (ONNN),
networks they are up
20.5%... S&P is only
up 8%... NASDAQ
still red hot is
only up 11.5%...
that is why we
speculate although
it can be
dangerous... and
when it comes to
these two Chinese
solar plays lets
talk about the
dangerous first... I
really want to
sticker these
things...
I want to give you
like the warning on
the side of
tobacco... when
amateurs look at a
stock they think
about everything
that could go
right...
professionals, and
I'm training you to
invest like a pro...
always look first at
everything that
could go wrong...
the subsidy program
probably isn't going
to do all that much
if anything for
earnings this
year... and in the
near term Chinese
solar firms have
suffered because of
falling Chinese
solar panel prices..
which dropped 23%
globally since May
and mid July...there
is too much
inventory.. plus it
all goes back to the
'50s even like in
the '40s you know
these stocks will
get hammered along
with all the other
alternative energy
plays... so
recognize that this
could take a while
to play out.. and if
the stocks have
extended think it's
gonna play out
immediately... and
you might have
opportunities to buy
YGE and
Suntech Power (STP)lower
if their earnings
drop earlier in the
year... and that
could happen too.
STP has one of the
widest and most
mature ranges of
building integrated
photovoltaic or
known as BIPV
products... these
are solar panels
that replace
traditional building
materials... which
should allow the
company to
participate in a
wider range of
highly subsidized
projects... it will
participate in many
of the highest
profile projects in
China... Shanghai
World Expo, great
brand
recognition....
that's it... STP
also has a lot of
room for
improvement... its
market share has
gone from 15% in
fiscal 2007 to just
9% last year...
supply and
distribution
problems... I think
those have been
resolved... If STP's
market share would
recover to 15%...
back to where it was
over the next 3
years... then it
would blow away the
street's
estimates... it just
reported inline
first quarter and
presented a weaker
outlook for full
year demand...
didn't like that...
but I don't like
this one for 2009
anyways... the 2010
and 2011 solar
subsidies that are
going to kick in
that I like...
STP has more than
$700 billion of low
yielding assets on
its balance sheet...
that's more than 35%
of its operating
assets... if it
sells these off that
would be a big
positive for the
company... what
about YGE... this
has got to be the
single most popular
stock ever asked
about in the
Lightning Round...
so suddenly you are
going to get
blessed... YGE this
is not to be
confused with
Cramer- fame beer
Ying lung ubiquitous
in Pennsylvania... I
do not want you to
confuse YGE with
Yungli, the beer I'm
going to pound later
this evening... now
YGE is the largest
vertically
integrated solar
company in China and
one of the lowest
cost solar players
in the country to
boot... 80 cents a
watt... I mean that
is really cheap..
you have to take it
from me... it's
usually $1 and $1.20
from the
competitors... think
of YGE as the
Chinese knockoff
version of First
Solar... you know
like those Gucci
handbags you can get
down in Canal
Street- that's an
area in New York...
It is low cost and
focuses on utilities
scale customers just
like
First Solar (FSLR)...
YGE missed on sales
and earnings...
remember I've been
telling you to avoid
these stocks I've
been right.. it
reported first
quarter and it
stunk... but it also
called bottom in the
solar market...
gotten from much
improved revenue
both in expanded
margins... just this
Tuesday the company
announced it's
signing agreements
to build new
factories... 300
megawatts of solar
power plants.. not
bad...
I want you to keep
in mind both STP and
YGE.. once again I'm
going to use that
term speculative...
it will take a while
for the subsidies to
kick in... so if
they miss
expectations when
they report in
August and the
stocks sell off...
I'm telling you
about an opportunity
to buy not sell..
unless something
seriously damages
the Chinese
Communist Solar
Great Leap Forward
Thesis... if you
want a more serious
non speculative play
on solar... again
I'm going to tell
you First Solar...
the uncontested best
agreed name in the
space.
▼ ▼
▼ ▼
▼
 The Bottom Line!:
Tonight I am lifting
my ban on Chinese
solar stocks thanks
to the Chinese
government's huge
newly announced
solar subsidy... but
only
Yingli Green Energy Holding
Co. (YGE)
and
Suntech Power (STP)
get the Mad Money
Semi-Seal of
Approval... and
again study them
this weekend because
this is only, only
for speculation.
[verbatim recap]
[end of segment]
Read Jim's next Segment
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