ReneSola LTD (SOL)

TeaBeri (85.28) Submitted: 11/22/2008 12:50:25 AM : Start Price: $2.63 SOL Score: -19.15

This is more of a "don't buy" recommendation than a belief that SOL will necessarily underperform. I believe that buying ReneSola right now is little more than a gamble based on the fact that its price has been higher in the past.Some apparent strengths of Renesola's are that it is Chinese and a Solar stock. Chinese stocks are probably going to do great in the future, considering the strength of the Chinese economy vs. that of the US, and Solar will in general benefit from Obama. But Chinese Solars are not in a good position right now! There are too many of them, and they are suffering from a lack of demand: http://blogs.barrons.com/techtraderdaily/2008/11/10/china-solar-companies-reportedly-slowing-production/?mod=yahoobarronsNow look specifically at ReneSola's balance sheet, not on the fool website: http://finance.aol.com/financials/renesola-ltd/sol/nys/balance-sheetCash has fallen and inventories have increased, which is exactly what the company doesn't need during a time of less production. They're good at collecting receivables, which I'll give them credit for, but that's not enough. And ReneSola's liabilities increased *more* than their assets did, meaning they essentially lost money. ReneSola is in an uncertain place in the Chinese Solar market right now. Too much inventory and too little cash means weakness in hard times. SOL might take off in the future, but right now we have no indication of that. I think even minimal attention to this company will give you ample warning before that happens. Rather than lowering risk by buying several Chinese Solar plays, wait and watch-and snap up the companies that prove they have a future. You might miss a 30% gain, but you'll avoid a 90% loss.