Canadian Solar - Momentum Stock Buy

Canadian Solar, Inc. (CSIQ) is up huge since bottoming out in March on surging estimates and cost cutting measures.

Company Description

Canadian Solar, Inc., together with its subsidiaries, designs, manufactures and sells solar cells and modules that convert sunlight into electricity in Canada and internationally. The company was founded in 2001 and has a market cap of $578 million.

Alternative energy is all the rage, as countries and company’s search for new methods to power the next generation while protecting the environment. This dynamic helping fuel Canadian Solar’s solid second-quarter results, reported on August 6.

Second-Quarter Results

Revenue was down a sharp 46% from last year to $114.2 million, but the company noted that it countered this effect by nearly cutting its cost of revenue in half to $91.1 million. Earnings came in much better than expected at 49 cents per share, blowing past the Zacks Consensus Estimate calling for a loss of 11 cents.

Canadian Solar went ahead and raised its 2009 solar power shipments guidance to between 260 and 270 megawatts, up from the previous 200 to 220.

Estimates Up Huge

Analysts like what they have seen, as estimates have made a dramatic push higher over the last 3 months. The current year is up from a loss of 9 cents to $1.03 per share. The next-year estimate is pegged at $1.28, a bullish 25% growth projection.

Valuation

Most investors are used to seeing sky-high multiples associated with alternative energy stocks, particularly in solar. Not so in this case, as shares of CSIQ are trading with a P/E multiple of 15.5X, a discount to the overall market.

The Chart

Shares of CSIQ have posted big gains since bottoming out with the market in early March just above $2.50, having since topped the $19 mark. Take a look at the nice run below.

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