Young Guns Taking Off

I posted a thread titled, Fresh IPO Ideas, last Wednesday (one week ago today) and have already witnessed some excellent results.

The blog entry included five trending IPO’s that look poised to make a further upwards advance over the next several months.

They included the five names below at these initial prices:
JASO – JA Solar Holdings, Co. Ltd. – $24.55
SMOD – SMART Modular Technologies Inc. – $14.31
SNCR – Synchronoss Technologies, Inc. – $27.88
GTLS – Chart Industries Inc. – $23.05
DVR – Cal Dive Intl., Inc. – $15.52

They closed Tuesday night at these levels:
JASO – $29.28, a 19.2% Gain
SMOD – $15.07, a 5.3% gain
SNCR – $28.78, a 3.2% gain
GTLS – $24.73, a 7.2% gain
DVR – $17.54, a 13.0% gain

I didn’t perform a full case study for any of the stocks but I will provide some additional information for JA Solar Holdings, Co. Ltd. I will start with last week’s data about the company’s institutional analysis. Notice the number of shares bought versus the number of shares sold (the stock is young so this is normal but I like the early support). I can’t argue with $300 million pouring into the stock.


JASO – JA Solar Holdings, Co. Ltd. – $29.28
Earnings Analysis:
$0.41 – Last Year Primary EPS
$1.00 – Current Year Mean Primary Estimate
$1.41 – Mean Primary Estimate — Next Year

Next Earnings: 8/14/07

Institutional Analysis:
Total Held by Institutions: 8%
Money Market: 68
Mutual Fund: 18
Other: 1
Shares Held: 15.16 mil
Shares Held Previous Period: 1.85 mil
Shares Bought: 13.51 mil
Shares Sold: 0.19 mil
Value of Shares Bought: $314.6 mil
Value of Shares Sold: $4.58 mil

Potential Trade Set-up:
The Ideal setup was last Wednesday at the moving average when I started coverage!

Ideal Entry area: $23 – $25 ($24.55)
Risk a maximum of 1% of portfolio (half of 1% would be better for this speculative play)
Set a stop loss above $22.00 (7-10% from entry – must be below 50-d moving average)
Target of $34+ based on recent swing action (stock is young for ideal target)
Risk to reward has a potential of 3.7-to-1 based on exact entry ($24,55) and stop of $22.

** JASO seems highly valued with a PEG value of 3.6822, one of the highest in the Semiconductors industry, which is supported by a PE of 138.082 that is also among the highest in the industry.

Key Fundamental Numbers:
Market Cap.: $3.9B
Outstanding Shares: 131.25M
P/E (TTM): 138
PEG Ratio: 3.68
Price to Sales Ratio: 29.98x
Book Value per Share:
Price to Book Ratio: 13.90x
Operating Profit Margin: 18.58%
Net Profit Margin: 18.60%
Gross Profit Margin: 23.38%
Total Revenue: 91,334
Operating Income: 17,216
Net Income: 16,840


Sister Stocks:
Sunpower Corp – SPWR
First Solar Inc. – FSLR
Superior Plus Incm Fund – 5SPFU
Covanta Holding Corp. – CVA
Yanzhou Coal Mining Adr. – YZC

Company Profile:
JA Solar Holdings Co., Ltd. is manufacturer of solar cells based in China. The Company uses processing technologies to produce solar cells. The Company sells its products to solar module manufacturers who assemble and integrate its solar cells into modules and systems that convert sunlight into electricity. It sells its products to customers primarily in China, and it has sold its products to customers in Germany, Sweden, Spain, South Korea and the United States. It has entered into customer agreements for the supply of its solar cells with a number of customers, including PowerLight Corporation, a wholly owned subsidiary of SunPower Corporation, Crown Renewable Energy, LLC and Canadian Solar Inc. Its monocrystalline solar cells have achieved conversion efficiency rates in the range of 16.0% to 16.5%.


  1. Chris,

    I do and did like JASO. Instead I went with SPWR (a little more weeks under its belt) which was trending along its 50 dma and 10 wma. Got in about $57 and up almost 7% today. I choose this stock because looking at how to take positions, it seemed like a no brainer (great fundamentals, accumulation and growth).

    Another one I am considering is JSDA. Last week it was consolidating at its 50/200 dma and the last two days has been trickling up. I do not see it getting up to the $32 level, but I do see it moving up from here.

    What are your thoughts?

  2. Albert,
    SPWR looks good overall but it is extended from the 200-d m.a. and had a sharp reversal on heavy volume this afternoon (to close the day). $62.50 is now the key resistance line after today’s reversal. A push through this will qualify the stock as a potential $60-$100 candidate.

    Also, the stock sold off heavily in May – distribution volume. it has been going back up on lighter volume than May’s totals.

    Let’s keep an eye on both as they are related directly.

  3. Chris,

    Love your Blog. Good job.

    JASO’s P/E (TTM) should be much lower than 138. The PE was 71, =29.28/0.41, based on last year’s EPS ($0.41). The PE (TTM) should be significantly lower than 71 since EPS of 2007Q1 is a lot better than that of 2006Q1.

  4. Jon,
    Thanks, and you are right as the true P/E ratio numbers are skewed at this time. We need more data for an accurate year-over-year P/E.


  1. […] 3.7-to-1 risk to reward ratio that was highlighted in Young Guns Taking Off was met yesterday as the stock is now 40% higher than my original entry point (only 11 trading days […]

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