While most Americans were focused on what Pope Francis said in Washington, and most investors were trying to deal with the traffic snarl he created in New York, bigger investment news was being made as Chinese President Xi Jinping said the country will launch a “cap and trade” plan nationwide in 2017.
The safe way to play this is probably with General Electric (NYSE:GEGeneral Electric (NYSE:, which has both wind generation and electric system expertise that will be vital for China to meet its goals.
Source: GE stock price data by amigobulls.com
The more speculative way to play is with solar stocks of companies operating in China.
While these shares are beaten down, most of the companies are profitable. Their financial problems can be cured by growth. Xi’s decision, made in response to the terrible air pollution now choking northern Chinese cities, is going to bring that growth.
Trina Solar (NYSE:TSLTrina Solar (NYSE:, for instance, is a completely integrated supplier of silicon photovoltaics. That means it makes the ingots, the wafers, and the cells used in its panels. It also builds complete projects, and reports financials in dollars.
The financials show that, following large losses in 2012, the company is now profitable. During the most recent quarter, ending in June, it had net income of nearly $41 million on revenue of $723 million. That means 5.6% of revenue is already flowing to the bottom line. Growth should bring more. The balance sheet shows the amount of debt-to-assets has fallen from its 2012 peak, and now stands at 36%.
Thus the stock is dirt cheap. It opened for trade Friday at $8.77. That’s a Price/Earnings multiple of 11.39, with a market cap of $802 million.
JinkoSolar (NYSE:JKSJinkoSolar (NYSE: is another name that has weathered the Chinese solar shakeout. Jinko has a smaller market cap, $637 million, and is based in southeastern China. The company reports in Yuan, and is bringing just 2.3% of revenue to the net income line, but it is doing that steadily.
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