Daqo New Energy Corporation (NYSE:DQ) actually started out profitable in 2010, and has since been losing that profit, ending with a $200 million operating loss in FY13. The company has a $300 million market cap. Moreover, it is based in China, so you have the potential for all kinds of fraud. This smells like another short.
JinkoSolar Holding Co., Ltd (NYSE:JKS) is another China-based company. It saw a $126 million profit in FY10, which was cut by two-thirds in FY11, which became a quarter-billion dollar loss in FY12, and managed a $31 million profit last year. Free cash flow ebbs and flows.
And yet, the company has a $712 million market cap. This makes no sense to me. It’s 40% off its high and I think there’s more downside.
Lawrence Meyers does not have a position in any company mentioned.
This article is brought to you courtesy of Lawrence Meyers from Wyatt Investment Research.