Why Chinese Solar Stocks Popped

Why Chinese Solar Stocks Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Solar stocks are shooting higher again today as the strong run in 2013 continues. LDK Solar , Canadian Solar , Yingli Green Energy , Hanwha SolarOne , and JinkoSolar led the way, gaining between 10% and 22% today.

So what: China's State Council said it plans to build 35 GW of solar by 2015, which would mean about 10 GW of annual demand for struggling solar manufacturers. It's also worth noting that this comes at a time when it appears that tariffs on Chinese solar panels will go forward on Aug. 6 at rates of up to 67% in the European Union. If both events happen as planned, then it could be a wash for solar manufacturers, leaving them in the same place they were a few months ago.

Now what: The Chinese solar installation figure isn't entirely news because we've been hearing reports that China will install 40 GW by 2015 since December. It also highlights that China has to create subsidized domestic demand to support subsidized manufacturers, a slippery slope for investors buying companies who aren't profitable even with all of this government support. All five companies that have popped double digits today are losing money, and any pop in shares is due to speculation that they may make a profit someday. Until that day comes, I'm steering clear.

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The article Why Chinese Solar Stocks Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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