Through its short history, China-based ReneSola, Ltd. (SOL), a manufacturer of solar wafers and related products, has regularly adapted to changing market dynamics. The company is aggressively ramping up its polysilicon and solar wafer production capacities.

Going forward, increased captive generation of polysilicon will improve its cost structure and enable wafer capacity expansions. Globally, rising solar wafer sales, along with escalating crude and long-term supply agreements, should collectively generate significant earnings growth.

Buoyed by these positive factors and impressive results, SOL increased its 2008 production output and sales guidance. Accordingly, with a predominantly bullish outlook and an attractive relative valuation, we initiate coverage of SOL with a Buy recommendation and a six-month target price of $24.25, representing 27.2% upside potential. SOL may be a great long-term investment.

SOL is on a fast track to growth and this is slated to continue as the solar power market has grown significantly over the past decade. According to Solarbuzz, an international solar energy research and consulting company, the annual solar power industry revenue may increase from $17.2 billion in 2007 to $39.5 billion in 2012.

The firm is ramping up its solar wafer production capacity and, in 2008, plans to nearly double its annual production of 2007. ReneSola plans to expand its wafer manufacturing capacity to 1,000 MW by year-end 2009. Accordingly, the company increased its previously issued 2008 production guidance to a range of 330 to 340 MW and 2008 sales guidance to a range of $570 to $590 million.