Fundamentals Make LDK Solar Look Extremely Undervalued

8/11 - "There is a good chance for $2.75 in earnings in 2008 for LDK Solar - even taking into account the $40 price tag in after hours that is under 15x forward earnings if the $2.75 is good. If you go with analysts ($1.70 + $0.40 beat) = $2.10 the forward PE ratio = 19. For triple digit growth. Instead people are flooding into retailers and restaurants (and autos and airlines and financials) for similar PE ratios... for 1/10th the growth. Because thats what the quant hedge funds say is "the truth"."

"Look, if restaurant stocks and clothing stores deserve forward P/Es of 16-19, I don't care if oil goes to $60 - much of the rest of the world moves to alternative energy because they don't want to be in the same pickle the U.S. has now twice put itself through (1970s, late 2000s). This company is (with no growth from this quarter) going to put up a $2.75 year - so let's call it $3. By simply putting a "clothing store" P/E ratio on it you are talking mid 50s. But companies growing triple digits generally get higher P/E ratios than companies selling sandwiches, at least in the market I grew up in. But maybe not in this era. If you dared give a company which can grow 30-50% year over year for the next 3-5 years a PE ratio in the mid 20s, you'd dare to dream of $75. I know, it sounds crazy - I come from the old school where earnings actually drove stock prices. Maybe one day humans will win out over computers again.

The most direct parallel to LDK Solar is ReneSola (SOL) which should benefit directly from such fantastic results. SOL is trading at a whopping 11x forward estimates. But this whole sector tends to trade together so perhaps its just a moot point - throw a dart. That's what the market does."