Real Goods Solar, Inc. (RSOL), JA Solar Holdings Co., Ltd. (ADR) (JASO): Are Monday’s Monster Moving Solar Stocks A Buy?

Furthermore, gross margins rose 6%, with 38% of its module shipments sent to Japan. To many, this is the most important news from the quarter, since Japan has much more stable pricing and produces greater margins than China.

If we look at JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) as an investment, it is trading at just 0.21 times sales, but still operates with a fundamental loss. However, unlike Real Goods Solar, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) has more than $450 million in cash and cash equivalents, according to Monday’s quarterly report. The $375 million in cash on its balance sheet actually exceeds its market cap. In addition, its debt-to-assets ratio under 50% isn’t good, but isn’t dangerous, either.

If you’re looking for a high-risk, high-reward investment, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) might be a good pick. Personally, I wouldn’t invest too much, but if the company continues to see improvements, it could definitely lead investors to big gains.

Conclusion

After five years of depressing losses, many investors don’t seem to believe the solar space can improve. Yet after earnings from JA Solar, First Solar, and Sun Power among others, it is obvious that solar is making a comeback. The key now is to properly assess each company, and separate the contenders from the pretenders.

In my opinion, a mix of fundamental performance and rock-bottom expectations legitimately drove JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO)’s rally. But Real Goods Solar, Inc. (NASDAQ:RSOL) is definitely a pretender at this point, seeing strength only because of its association with solar. Hence if I were looking for an investment, I’d definitely go with the company that has the capital to manage any future volatility: JA Solar.

The article Are Monday’s Monster Moving Solar Stocks A Buy? originally appeared on Fool.com and is written by Brian Nichols.

Brian Nichols has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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