Hot Penny Stocks – Daqo New Energy (DQ)

It’s finally a new year and a new quarter.  While many people are excited for the New Year, some aren’t so happy.  You see, it also happens to be 2012, the year the world ends according to the Mayan calendar.

Regardless of your stance on this end of the world nonsense, if we do wake up to a post-apocalyptic wasteland one morning, There’s one thing everyone’s going to miss… electricity.

That is, unless you’ve equipped your house with solar panels. Which leads us to this week’s company to put on your radar…

 

QUICK FACTS

Ticker                                      DQ

Industry                                   Semiconductor Equipment & Materials

Recent Price                           $1.83

Market Cap                              $70 m

Shares Outstanding                35.1 m

Average Volume                      248,740

Dividend Yield                          N/A

Website                                   http://www.dgsolar.com

 

COMPANY DESCRIPTION

Daqo New Energy (DQ) primarily manufactures and sells polysilicon, a key component in solar panels. In 2008 the company established Chongqing Daqo, their Chinese operating subsidiary.

In addition the company manufactures solar modules with subsidiary Nanjing Daqo. The company established a U.S. based subsidiary, Daqo Solar Energy North America, in 2009. The North American subsidiary has served as a marketing office for the continent.

Most recent is their Xinjiang Daqo New Energy subsidiary. It was established in February 2011 to expand the company’s polysilicon manufacturing capacity.

FINANCIALS

DQ’s most recent quarterly numbers were released on November 15, 2011.

The company reported revenue of $59.6 million in the quarter. Down from last year’s third quarter revenue of $63.2 million. This is a decrease of 5.8%.  Daqo also reported a net income of $12.4 million… a decrease year-over-year from a net income of $17.9 million.

As of September 30, 2011, the company reported $59.2 million in cash and long-term debt of $63.1 million.

 

 KEY METRICS ANALYSIS

Trailing P/E                                       0.6 x

Price / Sales                                     0.2 x

Return on Assets                             13 %

Insider ownership                              7 %

Short Ratio                                        2.6 x

Current Ratio                                     0.8 x

Total Debt To Equity                           32.4 x

 

RECENT EVENTS

The company received a number of rewards in 2011. In November the company’s CEO, Dr. Gongda Yao, won the “2011 Ernst & Young China Entrepreneur of the Year” award. Then in December the company was included in the “2011 China Cleantech Top 20” list. The award is meant to support the sustainable growth and cleantech sector in China.

Daqo is also in the process of expanding its new Xinjiang production facilities. In August the company announced approval of a $150 million loan from the Bank of China. The 6-year long-term project finance loan will enable the company to continue its “phase-2” expansion of the facility.

 

MANAGEMENT TEAM

Gongda Yao – CEO

Shihua Su – CFO

Liqiang Jin – Senior Vice President

Jian Zhu – Senior Vice President


STOCK ANALYSIS

 

 

 

 

 

Chart Courtesy of StockCharts.com

 

DQ’ 52-week low was $1.41 and the 52-week high was $14.97.  Right now the stock is trading at $1.83.  The 50-day moving average is near $1.88 a share and the 200-day moving average is at $4.41.  The company has a market cap of $64.3 million and 35.1 million shares outstanding.

 

 

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