The advent of fracking has so lowered the price of natural gas (
) that many alternative energy firms have been driven into
bankruptcy. China's JA Solar Holdings (
) is down more than 70% for the last year of market action,
suffering like so
many others in the sector who overbuilt in better
[caption id="attachment_71978" align="alignright" width="300"
caption="A JA Solar worker inspects a module"]
JA Solar has fallen so much that it is worth a look. Now trading
for around $1 a share, it is very close to its year low. With a
beta of 3.15, there is not a stock for investors with a low
tolerance for volatility.
But there are assets. First of all and most important, the
Chinese Government has made a huge push into solar
As the world's biggest importer of oil and coal, China wants
to develop solar energy and other alternative forms of power to
lessen its power bill. Beijing is also seeking to protect
the environment more. The geographical features of the
People's Republic makes it ideal for solar energy too.
Like China and solar energy, there are features of JASO that
make it attractive. For value investing, it is priced very low. The
price-to-book ratio is 0.21, the price-to-sales ratio is only 0.15,
and the price-to-cash-per share ratio is 0.31. For value investing,
JA Solar is very appealing.
Is JA Solar a value trap?
It is losing money and there is a short float of 7.14% (a short
float of 5% is considered to be troubling). But the share price is
up more than 2% for the last week of market action and more than 9%
for the last quarter. For the next year, earnings-per-share growth
is expected to grow by 60.40%. It was not that long ago that JASO
sold in the double digits.
In 2008, the stock was priced at over $26 a share. At a dollar a
share with the backing of Beijing, it could be worth taking out a
low cost position in JA Solar to invest along with Warren Buffett
in the solar energy sector.