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Strategies & Market Trends : Gersh's Option trades
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To: Mark Johnson who wrote (643)5/19/2008 11:16:21 PM
From: Mark Johnson  Read Replies (1) of 652
 
One stock that I believe will do well because of the current energy crisis
is Suntech Power Holdings (STP), A Chinese a maker of photovoltaic (PV)
cells. This idea is not for the conservative investor because the stock
will continue to be volatile. Because they are a foreign company and it does have
many risks including the fact that if China's currency devalues, the shares of
STP could get seriously whacked in half (again).

Revenue estimates are expected to be about $1.9 billion in 2008 and about
$2.9 billion in 2009, with earnings projected to be $1.55 and $2.58 respectively.
The wind is at its back and it is good play on solar energy. Stock is off about
50% of its high. I think the stock will easily double within the next 24 months.

Another Chinese solar play I like is ReneSola Ltd. (SOL), trading at about $28 per
share. Company is projected to earn about $2 in 2009. One way to play this
is to by the stock and sell the October 2008 40 (strike price) calls for about
$3.4 per share. If you do that trade and if the stock trades above $40 on the
3rd Friday in October when the options expire, you must sell the stock at
@ $40 regardless if the stock is at $60 per share. If you do hedge your position
and sell options on the stock, you would be a limited to a maximum gain of about
55%. Still, not bad for about 5 months. I think the stock will hit
$40 within the next 12 months.

Both ideas above do have their risks and not for investors that demand
immediate returns should not buy them.
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