Why Bulls Should Buy the Dip on JinkoSolar Stock

JinkoSolar stock sports attractively priced premiums at the moment

Deputy Editor
Aug 9, 2021 at 12:59 PM
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The shares of solar power company JinkoSolar Holding Co., Ltd (NYSE:JKS) are up 3% at $56.50 this afternoon, after the firm announced it obtained China's first photovoltaic module Life Cycle Assessment (LCA) certificate. Today's price action has brought JinkoSolar stock to a year-over-year lead of 172.2%. And though the $64 level rejected the security's mid-July rally attempt, a historically bullish trendline a bit lower on the charts could propel JKS back towards annual highs.

Specifically, JinkoSolar stock just pulled back to its 40-day moving average, after spending a few months trading above this key trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, six similar signals have occurred in the past three years. After 80% of these pullbacks, JinkoSolar stock enjoyed positive returns one month later, averaging a substantial gain of 22.3%. A similar move from its current perch would put the stock at $69.10, a chip-shot away from its Jan. 27, annual high of $76.53.

JKS Chart August 9

Digging deeper, shorts are already hitting the exits at a rapid pace. Short interest fell 23.1% in the most recent reporting period, though the 7.16 million shares sold short make up a healthy 15.8% of the stock's available float. Should this pessimism continue to unwind, it could put even more wind at the equity's back. 

A shift in analyst sentiment could also propel JinkoSolar stock higher. Though there's just two brokerages covering the solar concern, both recommend a hesitant "hold." Meanwhile, the 12-month consensus price target of $41.19 is a 27.2% discount to current levels.

Now looks like a good time to weigh in on the security's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 75% stands higher than just 18% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

 

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