Robert Hsu and SOL

This is definitely not the best moment for Mr. Robert Hsu and for his $3.000/year paying readers.

Luck is really against Mr. Hsu. It seems like every investment he suggested in the last months is a flop.

Today I am going to report what happened to ReneSola (SOL) between May and July 2008.


May 28th 2008
Inspired By the Sun
Usual blah blah here.

Buy: ReneSola Ltd.
Some other blah blah.

Strong Financials
Because of its strong position in the solar power market and smart expansion projects, ReneSola has grown rapidly. Just look at the numbers: Net revenues increased significantly from $5.1 million in 2005 to $249.0 million in 2007.

And the company's net income soared from $1.2 million in 2005 to $42.9 million in 2007. And the impressive performance continues into the first quarter of 2008, as net income surged 161% to $17.7 million or 28 cents per diluted share, from $6.8 million or 14 cents per share in the same period a year ago. That's 22% higher over the average estimate of analysts. And sales more than tripled to $123 million. In addition, gross margin -- one of my favorite indicators of a company's operating performance -- improved to 22.1% from 20.4% last year. ReneSola expects annual net revenues to come in at approximately $570 to $590 million for 2008, which is 129% growth from 2007!

Production output grew 30% to 66.5 megawatts (MW) in the first quarter from 51.3 MW in the fourth quarter of 2007. And looking ahead, ReneSola anticipated production output to be in the range of 75 MW to 80 MW in the second quarter. In response to the positive report, the company also increased its production outlook for 2008 to 330 to 340 MW. The company also said that it expects wafer production capacity to increase to 1,000 MW by the end of 2009.
The stock became publicly traded in the New York Stock Exchange at the end of January 2008. It is now trading at less than 20 times this year's earnings, which is very cheap for a solar company with triple-digit earnings growth potential. I expect ReneSola's strong momentum to continue because of its rapid growth, its competitive profit margin, a hot solar market and a secure supply of raw materials. I want you to buy SOL under $28. I'm targeting $40 by the end of the year, which would give us a nice short-term gain of about 50%.

If you read this blog before you should know how (un)reliable are the targets Mr. Hsu sets.
On May 28th SOL closed at $26.45, within the $28 limit. Interesting to notice that in the 2 months before Mr. Hsu buy advice SOL moved from less than $10 to over $25. A +150% in 2 months is NOT sustainable. In fact...

June 11th 2008
ReneSola Ltd. (NYSE: SOL) shares have traded slightly down this week. The stock has been hit hard recently because of a secondary offering that would increase share supplies. I want to watch the stock a bit to see how the new shares are digested before buying the stock again. I recommend that you hold SOL for now.

On June 11th SOL closed at $19.00.


July 2nd 2008
Sell ReneSola Ltd.
At the end of May, I recommended ReneSola (NYSE: SOL), a leading Chinese manufacturer of solar wafers, as a play on alternative energy. The company has worldwide exposure, with branches in the U.S., Singapore and Malaysia. The stock looked attractive at the time, as in late May it had a nice breakout. Plus, the company had strong financial numbers -- its first-quarter net income surged 161% from the same period a year ago, and its earnings grew by the triple-digits, with the stock trading in May at less than 20 times this year's earnings. I expected that ReneSola would benefit from the rising oil costs as people turned to solar power as an alternative form of energy. But even as crude oil is breaking new records almost every day, alternative energy plays haven't caught on yet. Making matters worse, the solar sector took a major hit in the past month as the subsidies from European countries became lower than the industry experts' forecast. As a result, all of the major solar companies, including our ReneSola, were down sharply recently. As a small-cap company, ReneSola is a new stock that has been listed in the U.S. for just five months, so high volatility is expected. But after yesterday's panic selling (stop loss-related selling), the stock has sold off about 45% from where we bought in. That was more than I was willing to lose on any individual trade. I don't think that this stock will make a miraculous correction any time soon, so I think we need to cut our losses and sell the stock. Sell ReneSola.On July 2nd SOL closed at $13.90. The day after, unhappy Mr. Hsu's paying subscribers sold SOL, who closed at $13.16. That is the minimum SOL reached, then it headed toward $15.

I think we should have a look at the chart to better appreciate Mr. Hsu's perfect timing.


A quick -47% for Mr. Hsu on this round.