MarketGrader’s Stock of the Day: Canadian Solar (CSIQ)

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At the top of our new Movers & Shakers list today appears Canadian Solar Inc. (NASD: CSIQ). The stock’s Sentiment score has, in the last four weeks, jumped 483% from 1.1 (Negative Sentiment) to its current 6.5 (Neutral Sentiment).

The company, with a market capitalization of $530 million, manufactures solar cell and solar module products and has development facilities in China. From a fundamental perspective investors should tread carefully as the company is the subject of an investigation by the SEC regarding the way it booked some of its sales in 2009. As a result of this investigation and its alleged misrepresentation of financial results in 2009, the company is also the subject of several shareholder lawsuits. In addition to this, the company’s first quarter results, belatedly released on August 19th, missed analyst estimates as a result of a decline in its net income of 81.79% despite almost tripling its revenue. MarketGrader downgraded the stock from ‘Buy’ to ‘Hold’ on August 25th.

This divergence between the company’s deteriorating fundamentals, which could well prove to be temporary as it fends off shareholder lawsuits and waits for the SEC probe to conclude, and the stock’s improving Sentiment as described above, could prove to be a good opportunity for traders anticipating better fundamentals once the company’s accelerating revenues make its way to its bottom line. This is especially attractive considering the stock trades at 7.8 times trailing and 8.6 times forward earnings and is 64% below its 52-week high of $33.68. For MarketGrader’s complete report on the company please click here.

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