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Daqo (DQ) Soars 7.3%: Is Further Upside Left in the Stock?

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Daqo New Energy (DQ - Free Report) shares rallied 7.3% in the last trading session to close at $72.11. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 41.3% gain over the past four weeks.

Optimism over strong customer demand and higher prices of polysilicon seemed to have driven the stock higher. The company is benefiting from strong demand for solar energy products. Higher polysilicon average selling prices driven by strong demand are also driving its sales and margins. The company’s efforts to improve its cost structure are also supporting its margins. Its energy efficiency efforts and enhanced manufacturing efficiencies are contributing to lower costs.

This solar panel parts maker is expected to post quarterly earnings of $6.46 per share in its upcoming report, which represents a year-over-year change of +113.2%. Revenues are expected to be $1.07 billion, up 142.9% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Daqo, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on DQ going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Daqo is a member of the Zacks Chemical - Specialty industry. One other stock in the same industry, Quaker Chemical (KWR - Free Report) , finished the last trading session 0.8% lower at $151.39. KWR has returned -1.6% over the past month.

Quaker Chemical's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.14. Compared to the company's year-ago EPS, this represents a change of -37.4%. Quaker Chemical currently boasts a Zacks Rank of #3 (Hold).

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