For Immediate Release
Chicago, IL – September 18, 2014– Zacks Equity Research highlights Star Bulk Carriers (SBLK-Free Report) as the Bull of the Day and SkyWest (SKYW-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on First Solar Inc. (FSLR-Free Report), JinkoSolar Holding Co., Ltd. (JKS-Free Report) and Trina Solar Ltd. (TSL-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Star Bulk Carriers (SBLK-Free Report) is a small cap stock currently flying under-the-radar. After years of extremely depressed pricing throughout its industry, business has finally started to improve. Analysts have recently revised their estimates significantly higher for Star Bulk, which sent the stock to a Zacks Rank #1 (Strong Buy).
And despite strong growth projections, shares recently traded at just 7x forward earnings. If the global economy remains stable and the industry continues to gain momentum, Star Bulk Carriers offers tremendous upside potential.
Star Bulk Carriers is a shipping company that provides global transportation of dry bulk materials, including iron ore, coal and grain and minor bulks which include bauxite, fertilizers and steel products. The company currently owns and operates eleven Capesizes, four Post Panamaxes, six Kamsarmaxes, two Ultramaxes, and ten Supramaxes, and will accept delivery of another 34 secondhand vessels in the second half of 2014. In addition, the company has 13 Newcastlemax vessels, 10 Capesize vessels, and 14 Ultramax vessels on order for delivery by early 2016. It is incorporated in the Marshall Islands and has executive offices in Athens , Greece .
Following years of extremely depressed pricing, the drybulk shipping industry has finally started to improve. And this momentum is expected to pick up steam. Many industry experts expect the dry bulk shipping sector to experience an improving charter rate environment throughout the second half of 2014 and 2015 as demand continues to outpace supply in the space.
Despite a slowdown in China and sluggish global economy, demand for dry bulk shipping has been solid. And this demand is expected to remain strong barring a major slowdown in the global economy. Furthermore, after experiencing annual fleet growth of more than 10% from 2009-2012 (due to orders that were generally placed pre-Great Recession), dry bulk shipping fleet growth finally began to slow in 2013 and is expected to slow even further in 2014 and 2015. So this supply/demand imbalance is expected to drive rates higher. And considering Star Bulk’s significant operating leverage and financial leverage, even moderate top-line growth should lead to stellar earnings growth.
Bear of the Day:
SkyWest (SKYW-Free Report) recently delivered disappointing second quarter results as both the top and bottom lines missed the Zacks Consensus Estimates. This prompted analysts to revise their estimates significantly lower for both 2014 and 2015, sending the stock to a Zacks Rank #5 (Strong Sell).
And while shares of SkyWest have sold off heavily so far this year, the stock still doesn't look like a screaming value at these levels.
SkyWest operates the largest regional airline in the United States through SkyWest Airlines and ExpressJet Airlines. The company has fixed-fee flying arrangements with United Airlines, Delta Air Lines, American Airlines and US Airways to operate as United Express, Delta Connection, American Eagle and US Airways Express. The company also operates flights for Alaska Airlines under a contractual agreement.
Under these agreements, the major airlines generally pay SkyWest a fixed fee for each departure, with additional incentives based on completion of flights, on-time performance and baggage handling performance.
SkyWest serves markets throughout North America with approximately 4,000 daily departures and a fleet of approximately 757 regional aircraft. It is headquartered in St. George, Utah.
SkyWest delivered disappointing second quarter results on August 6. The company reported a loss of 29 cents per share for the quarter, missing the Zacks Consensus Estimate by 10 cents. This was down from a gain of 39 cents in the same quarter last year.
Additional content:
India Gets Sunnier for Solar Companies
Solar energy is one of the best alternate energy sources in terms of addressing rising global concerns on pollution from power plants. With about 300 clear days of sunlight and availability of land, India could utilize solar energy on a massive scale to provide green energy to the growing nation.
The Indian government’s intention to implement anti-dumping duties on solar panel imports earlier this year to save domestic panel producers raised concern over the prospects (read: Will India Put U.S. Solar Exports at Stake?). But the recent development revitalizes hope for the industry’s prospects.
What Was the Anti-Dumping Plan?
Anti-dumping duty is a ploy used by governments across the globe to safeguard the interest of domestic players. After a detailed investigation, the Directorate General of Anti-Dumping & Allied Duties, a government unit under the Ministry of Commerce, forwarded a proposal to the Indian government to implement anti-dumping duties, ranging from 11 cents to 81 cents per watt, for imports from countries like the U.S. and China , among others.
We note that the U.S. and China have been at odds with each other, imposing solar tariffs targeting the other country. The million dollar question was that whether India would join the trade conflict by levying anti-dumping duty – a move that wouldn’t have been in the best interest of promulgating solar.
What ' s the Current Standing?
Last week, the Indian government, through its Commerce Ministry, categorically declared that the anti-dumping proposal is not notified and hence allowed to lapse. This means that solar panel exports to India will be free from any imposition of anti-dumping duties.
The Indian government has a broader take on the issue. The current level of domestic solar panel production is way too low to meet the long-term solar power ambition of the country.
What Does It Mean for the Solar Whales?
U.S. and Chinese solar panel producers are among the largest to manufacture high quality solar panels. At present, nearly 70% of the solar projects in India are being built from Chinese solar panel imports. The Indian government in Jan 2010 had set a target of adding 20,000 MW of grid connected solar power plants by 2022. The newly elected pro-business Modi government now has an ambitious plan of connecting all Indian households with solar energy by 2019.
The Indian government’s measures to both promote solar as well as support healthy trade practices will act as a tailwind for the following Chinese and U.S. solar equipment manufacturing stocks.
First Solar Inc. (FSLR-Free Report) with a Zacks Rank #3 (Hold) is a U.S. solar cell manufacturer, aiming to further expand its footprint in India . The company has already announced its first self-developed project in India and will start construction on multiple projects in 2014 totaling 45 MW AC.
With continuous investment in R&D to improve the quality and efficiency of its solar products, we believe this Tempe, AZ-based company is well poised to further penetrate the Indian solar markets.
JinkoSolar Holding Co., Ltd. (JKS-Free Report) currently has a Zacks Rank #3 (Hold) and is based in Shangrao, the Peoples Republic of China . This company is quite optimistic about rapidly rising solar cell demand in the Asia-Pacific region, with India and Japan being the key solar cell markets this Chinese manufacturer is aiming at besides its own country.
JinkoSolar Holding has already signed a strategic distribution agreement with PROINSO, a distributor with a strong presence in the Indian market. With solar cell exports from China to Europe dwindling, the Indian markets could be the next favorable destination.
Trina Solar Ltd. (TSL-Free Report) also has a Zacks Rank #3 (Hold) and is based in Changzhou , China . The company is looking forward to opportunities in the emerging markets and has secured contracts in South America and in Southeast Asian countries.
India could be the land of opportunity for these Chinese solar cell manufacturers. Trina Solar has plans to set up 1500 MW of grid connected solar power projects in India .
Final Take
We view the decision of the Indian government to eschew anti-dumping duties as a win-win solution for the global exporters as well as the Indian administration. The global players will now find India – the second largest populated country of the world – the happy hunting ground to sell solar. The Indian government on its part is keen on achieving its solar objectives and contributing towards a cleaner and more sustainable environment.
In a nutshell, until the Indian producers come of age and compete with the global players on an equal footing, the non-levy of anti-dumping will allow the large global solar panel producers to tap this growing market.
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