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Shares in small-cap Chinese solar manufacturer JA Solar Holdings (JASO) traded up almost 7 percent on Friday without a clear news item driving the buying spree. The trading was on heavy volume, with the stock exceeding its average daily volume by 11 am.
Shares gapped up 4 percent to $10.98 each at market open, spiked to $11.23 in the first 10 minutes of trading, retreated sharply to below the opening price, then started gaining again and eventually cleared $11.25 apiece.
JA Solar Holdings has been on a run of late, up nearly 30 percent over the last 6 months and over 150 percent over the last year. It’s benefitting from a bull-run on solar stocks that is stretching into its 16th month.
The day’s move did not appear to have a specific piece of news driving the action, but it’s possible that early speculation about the release of Q4 earnings scheduled for Monday could be the reason for the buying as traders and investors alike try to get in prior to the pop that could follow strong earnings data. Current estimates place Q4 earnings to hit $0.01 a share, a massive swing to the black year-over-year from 2012’s Q4 loss of $2.66 a share.
There are additionally some positive technical factors that could be playing a role in gains. Since crossing its 20-day and 50-day SMAs in early February, the stock has been treating the former as a support level. Yesterday saw the stock dip below that level but recover to close above it, and traders could be given added confidence that this pattern will keep share prices higher.
The stock is also developing a triangle pattern as long-term support and resistance levels converge.
Analysts have been up on JA Solar of late as well. Credit Suisse broadly improved its rating on Chinese solar companies on Monday, citing project development growth in their home country.
“Project development growth has the potential to increase valuations for China solar companies in our coverage,” wrote analysts Brandon Heiken, Patrick Jobin and Maheep Mandloi. “As investor interest rises in solar project assets in China, companies like Trina Solar (TSL) , JinkoSolar (JKS) , Canadian Solar (CSIQ) , JA Solar (JASO) , and Yingli Green Energy (YGE) should be able to finance construction costs and sell projects more readily, and/or eventually transfer projects into growth IPPs.”
The Friday prior to that saw analysts at ROTH Capital Partners and Sidoti both initiate coverage at a “buy” rating, with ROTH’s Analysts setting a price target of $15.