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Daqo (DQ) Surges 14.1%: Is This an Indication of Further Gains?

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Daqo New Energy (DQ - Free Report) shares soared 14.1% in the last trading session to close at $28.4. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.9% gain over the past four weeks.

DQ’s rally appears to reflect the growing hopes of a recovery in industry conditions. China’s solar industry is seeing a rebound, thanks to the Chinese government’s efforts to address significant overcapacity and curb fierce competition, leading to a recovery in polysilicon prices. 

This solar panel parts maker is expected to post quarterly loss of $0.61 per share in its upcoming report, which represents a year-over-year change of +33.7%. Revenues are expected to be $162.3 million, down 18.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Daqo, the consensus EPS estimate for the quarter has been revised 37.8% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. 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 #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Daqo belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Minerals Technologies (MTX - Free Report) , closed the last trading session 0.4% lower at $61.63. Over the past month, MTX has returned -2.9%.

Minerals Technologies' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.49. Compared to the company's year-ago EPS, this represents a change of -1.3%. Minerals Technologies currently boasts a Zacks Rank of #4 (Sell).


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