JA Solar Holdings (JASO – Nasdaq)

Dear Bottarelli Research Member,

We witnessed a pretty sizable pullback in the markets this week – something we have been calling for recently. Over the next few weeks, you should be able to pick up some of our best small-cap picks for attractive prices. Nevtah Capital Management (NTAH.PK), for example, was a recent pick that finally triggered a buy at $1.50. I also know that I’ve been harping about the “Canadian Energy Trusts” simply because they’re going to hand you the easiest money you’ve ever made (see my past comments about CNE, PVX, and AAV in the Alert Archive area of the Web site). Also on the move is Uranium Resources (URRE – NASDAQ), which just set a new 52-week high at $11.09. If URRE finds support at the 50-day moving averages – and it probably will – then it’ll have more room to move higher.

Not to be outdone, our latest recommendation on WorldWater & Power (WWAT.OB) is also moving aggressively to the upside. In fact, WWAT just set a new 52-week high at $1.28 per share. That’s a gain of 43.82% from our entry price earlier this week – even in the midst of a market that moved aggressively lower!

Without question, a lot of our recent small-cap picks are starting to make their moves – so maintain all of your open positions. But now let’s dive into this week’s newest pick.

The stock I’m putting out today is one that Bryan and I have been watching for over a month. It really shot up aggressively after hitting my initial triggers – but now it has come back down and re-established (what we feel is) a strong secondary entry point.

The company is an emerging and fast-growing manufacturer of high-performance solar cells. They just recently went public, and they’re attracting a great deal of investor attention as polycrystalline, which is used for making solar cells, is getting harder and harder to acquire.

What I really like is that they’ve been using the proceeds of their IPO to lock up future contracts on existing supply. This tells me that management believes in the future of their business and is putting the interests of the company first. This doesn’t always happen, as corporate insiders typically line their own pockets with cash first and then throw the scraps to shareholders. But with this play, management is flowing their cash proceeds right back into their core business at a rate unlike any of their peers – and I personally feel this will greatly benefit early shareholders like you and me.

After all, in the homebuilding business we used to say, “He whom owns the land always wins.” With this company, you’ll soon be tweaking that line to say, “He whom owns the raw asset always wins.” That’s what makes this play such a tremendous winner. As you’ll see below, your newest small-cap recommendation has locked up the largest block of pre-paid polysilicon of any solar firm – setting the table for a tremendous future.

The company is JA Solar Holdings (JASO – NASDAQ) and I’d like to establish a position now. If you recall, one of the key factors in last week’s WWAT play was that they’re using 95% less polycrystalline to produce their cells, and you can see fantastic results of that investment already. In the case of JASO, you’ll own the company that IS the manufacturer, and that could offer you an explosive mover as the booming solar market takes on global exposure.

At this point I’ll hand it over to Bryan – but before signing off I’d like to quickly mention that I’m very excited about a handful of new small-cap “gems” that’ll be coming into play very soon. Timing is everything, of course, so I’ll be telling you more about these stocks when the situation is right. So have a great week – and get ready for more exciting small-cap action!

Sincerely,

JA Solar (JASO – NASDAQ) Has All The Polysilicon Wafers It Needs In 2007 – And They’ve Already Secured 70% Of The Supply Needed For 2008. No Other Solar Company Has A Position Quite Like This.

JA Solar designs, manufactures, and sells solar cells primarily in the People’s Republic of China, but they also sell to customers in Germany, Sweden, Spain, South Korea, and the United States. But before getting into JASO’s specifics, let’s take a step back and examine the big-picture trend that’ll drive the stock price higher.

If you read our WWAT alert from last week, then you’re well versed in the growing popularity of solar power — the world’s most inexhaustible and least polluting energy source.Today’s small-cap stock pick takes the solar story a step further and focuses solely on the raw asset: polysilicon.

Polysilicon is a key component for integrated circuit and central processing unit manufacturers. In other words, it has always been the key commodity for chip companies like Advanced Micro Devices (AMD – NYSE) and Intel (INTC – NASDAQ), which assures you that the demand for Polysilicon is driven by the top semiconductor manufacturers in the world.

In prior years, AMD and Intel have enjoyed the luxury of inking three-to-six-month supply contracts with polysilicon producers, but now the competition to acquire polysilicon is becoming a lot more difficult. You see, polysilicon is also the key component for solar panel construction – and now that solar companies are demanding polisilicon as well, the demand game has dramatically changed.

Tom Linton, who negotiates polysilicon deals for Freescale Semiconductor (FSL – NYSE) said, “Global warming is not good for the semiconductor industry. The solar industry is growing very rapidly. It’s really created demand in the past several years that wasn’t there before.”

What you have is a fast-growing solar industry creating unprecedented demand, which in turn creates a supply crunch like never before. In fact, for the first time ever, in2006 solar-panel makers consumed as much polysilicon as chip manufacturers. Solar companies purchased more than 50% of the silicon wafers produced last year. That’s up from 10% from six years ago! And as a direct result, polysilicon is in short supply. Therefore, prices have grown substantially more expensive.

As chip companies compete with solar companies to acquire the raw asset that drives their core businesses, it’s clear that the rapidly growing photovoltaic solar industry could be dramatically limited in late 2007 and 2008 due to severe polysilicon material shortages. In fact, research firm CIBC predicts an “acute shortage” through 2008 – with relief not coming until 2009 at the earliest.

That’s why JA Solar is such a powerful investment.

In the midst of this supply crunch, JA Solar has already locked up all the polysilicon wafers it needs in 2007 – and they’ve already secured 70% of the supply needed for 2008.

With polysilicon in such short supply and competition so fierce, how has JASO been able to secure so much?

In a rather savvy move, JASO used the proceeds from their recent IPO to lock up polysilicon in deals called “pre-payments.” In fact, if you look at all of the solar IPO’s in the last 18 months, you’ll see that JASO has funneled back a whopping 47% of their IPO proceeds for polysilicon pre-pays. This is by far the largest pre-payment of any public solar company – giving JASO the enviable position of 18 months of polysilicon supply without pricing competition.

I feel this will be the primary factor that sets JASO apart from all the other publicly traded solar companies. But aside from that, JASO looks attractive even from a raw numbers perspective. Trading at 16.5 times its expected 2008 earnings, this is well under the multiple of 21.5 for competitors like Suntech Power (STP – NYSE) or 64 for First Solar (FSLR – NASDAQ).

Furthermore, the fact that JASO makes their solar cells in China allows them to produce the cells at a lower cost than rivals operating elsewhere. Factor into the equation a political and cultural climate that’s embracing solar power like never before, and JASO offers you powerful exposure to one of the hottest market sectors available today.

All things considered, JASO looks to be one of the best winners within the solar sector, so at the open of trading next week let’s add JA Solar Holdings (JASO – NASDAQ) to our small-cap ledger. Here’s the play…

PLAY: Buy shares of JA Solar Holdings (JASO – NASDAQ) at or under $23.75, good for the week.

Sincerely,