Chinese Solar Stocks Become More Attractive on First Solar Deal

First Solar (FSLR) wasted no time in securing a deal from China. One day after announcing the arrival of senior Chinese government leaders from the Standing Committee of the National People’s Congress of China, FSLR announced that it had secured a major contract in Inner Mongolia. This 2 gigawatt desert solar power plant is exactly the kind of large-scale, solar utility that First Solar has said it is pursuing as it transitions to the next phase of the solar market. This contract also indicates that the Chinese are serious about blunting growing charges that they are dumping panels on the market and engaging in unfair trade practices in the solar market.

While this contract is a positive for First Solar (and the stock market responded quickly to the news – although the initial surge was met with some high volume selling), I think it is even better news for Chinese solar companies. If the Chinese government is willing to throw FSLR this big a bone, the largesse that it will spread on its own companies should be “spectacular.” As I have stated in the past, Suntech Power (STP) is my favorite short-term play for Chinese solar stocks. In the past month, I have also become impressed with Trina Solar (TSL).