Trina, Unloved Child, Can Do No Right

Lots of children grow up with disapproving parents — the unloved child is the staple of TV and movie dramas. That movie-of-the-week cliche is now playing out on the U.S. stock market, where Trina Solar (TSL) saw its earnings more than double. Trina’s net profit for the second quarter was $17.1 million, or 68 cents per American depository share, which in light of the $7.4 million, or 32 cents per ADS a year ago, is exactly the kind of earnings performance that a lot of companies in the banking, consumer goods and most other sectors would spill blood (maybe even their own) to have right now.

The stock market’s response? Trina’s shares, which bumped up as high at $32.43, or 4.7 percent above their close on Friday, slumped down to end Monday at $30.14 — down 3 percent after all was said and done.

What are the parental investors waiting to see before they start applauding their approval? In short, they’re tired of being disappointed because of their own outsize expectations. Last year, solar stocks could do no wrong. This year, it’s the opposite. Earnings not quadrupling, or even tripling? It seems if you’re not inflating a new bubble, it’s an occasion for shame.

Sure, there are threats of fewer subsidies from governments in Spain and the U.S., so it’s not surprising that solar earnings in recent months have been greeted with extreme caution. But the past week has brought news of a major, influential utility turning to solar energy in a big way. PG&E’s deal with SunPower has buffeted up SunPower’s stock and should have rallied others. But investors, accustomed to the chimera of the credit crunch on their backs, remain bearish.

Trina’s earnings came in below analyst expectations, but a good part of that was caused by forex losses and the discontinuation of a Chinese polysilicon project. Its revenue comes partly from Spain, but mostly from other European countries. Its biggest customer in 2007, IBC Solar, is based in Bavaria.

The truth is, Trina did pretty well. Not good enough to justify a bubble. But good enough to argue that the long-term promise of solar energy is still on track. The bad news: If you bought solar in 2007 looking to become a millionaire overnight, you were too optimistic. The good news: If you pick your spots in mid-2008 among solar stocks, evidence is mounting slowly, but surely, that it may work out.