Using China Solar Stocks To Grow Your Portfolio

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Green industries like Wind, Solar, and Sustainable Energy are growing across the globe, but perhaps none so fast as in China.

After all, China is a BRIC nation, which means that it’s not a fully developed economy, but it’s not a third world country either. It’s for this reason that every China stock is a growth stock. Even Baidu, the search engine giant with over $34B in market cap had only $208M in market capitalization five years ago. You don’t need to get out your pocket calculator to know that’s over 200% a year in growth.

It only stands to reason that other emerging industries in China will also see significant gains over the next five years. One of the strongest positions of the sustainable energy movement is in solar power. That is particularly true in the manufacturing industry. Companies that build solar panels and photovoltaic solar cells are poised to see extremely strong gains over the next five years. Companies like Jinko Solar (JKS), Trina Solar (TSL), and Solarfun (SOLF) are all dynamic stock picks to get exposure to the highly lucrative solar manufacturing market. Of the three, Trina Solar has the strongest showing in the past few quarters and the largest market cap.

Though these companies are based in China, the majority of their customers are in Europe and North America.

Solar energy has some risks associated with political adoption of environmental protection laws. This makes these plays very difficult to value, and for this reason, it’s important to set viable stop-loss points which take into account the volatility of these small caps while still allowing one to cut ones losses if a company was to severely devalue. For this reason, it’s important to find a good fundamental and technical entry point and set a trailing stop with a wider margin than you may be used to.