Stock Smash Performance Review & Outlook 2016

Since the launch of Stock Smash in September 2014 a lot of stocks have been discussed, but how well is our advise? The Stock Smash portfolio gained a return of 5.93% since our start, whereas the S&P500 realized a return of -2.93%, which means we outperformed the market by 8.86%.

Top 5 trades*:

1. Short Imtech:   +84.62%
2. Short GoPro:    +84.26%
3. Long Huawei:   +53.34%
4. Short Twitter:   +53.26%
5. Long Nike:       +37.82%

Worst 5 trades*:

1. Short Amazon:       -92.65%
2. Long Alcoa:           -50.65%
3. Long Tata Motors:  -40.40%
4. Long Shell:            -36.22%
5. Short Facebook:     -35.28%

Our short positions on Imtech and GoPro have been a particular highlight. On the other hand, going short on Amazon cost us dearly. Yet, as we gained a positive overall return and outperformed the market, we are fairly satisfied with our stock advices.

Outlook 2016
We become more conservative concerning stocks for 2016. Higher volatility in the markets and growing concerns about global economic growth can severely harm stocks in 2016. Yet, we also believe that this might also create golden opportunities for stock picking, so we won't write off stocks as a whole. Furthermore, we believe Europe still creates enough opportunities to keep investing in this region due to economic recovery and expected stimuli by the ECB. Due to the recent downfall in stocks in Emerging Markets we keep an eye on entry moments, because economic indicators in for example India are still on point. We also continue to look for other investment opportunities such as sugar and real estate. 
 
*Based on 12 January 2016.

Canadian Solar Inc.

Canadian Solar Inc. a manufacturer of solar cells and other solar related products, experienced a turbulent 2015 with stock prices ranging from $16 to $39. 2016 starts no less turbulent as Canadian Solar lost 20% of its value over the past 5 days. It is not just Canadian Solar that experiences a downfall in stock price, but rather it's the whole solar power industry that tumbles. One of the two major reasons is the current oil crash. When oil becomes cheaper, the solar industry loses its competitive edge since there is less incentive to innovate for financial reasons. Consequently, people will generally postpone solar power related acquisitions. The other reason is fear of China. Slowdown in the Chinese economy, which is the largest buyer of solar related goods, may cause a fall in demand of solar cells and could put profit margins under pressure.
Yet, the fundamentals remain strong for Canadian Solar. Net income and earnings per share have increased outstandingly over the recent years and with a Price/Earnings ratio of 4.97 the stock price is very attractive at the moment. It seems that due to the current downfall in stock price, the market has already accounted for worse sales in quarter one, but the correction may have been too strong as sales in markets as US and Saudi-Arabia are gaining momentum. Moreover, fear of China could be exaggerated, because the need to reduce pollution in China will remain. Besides, the Chinese government has always been stimulating their economy and will likely try to turn the tide by stimulating even further. This is another reason why solar cell demand does not necessarily have too fall as much as the market anticipates.
United States regulation could further boost Canadian Solar performance, as the US extended subsidies on solar projects to 2017.  Moreover, industry experts expect the US market for solar products to triple from 2015 to 2020.
In conclusion, the current oil price crash that caused solar stocks to plummet creates a great entry moment for the solar market.  Furthermore, looking at fundamentals of Canadian Solar, this firm looks like a raw pearl within this industry. Strong buy for the long term.