As I noted last week, solar stocks rose following better than expected results posted by Canadian Solar (CSIQ) and a bullish note on the solar sector by UBS.

But then China's JinkoSolar (JKS ) reported its fourth-quarter results Thursday morning, and some investors were upset by the decline in the company's gross margin to 11.6% from 12%, contributing to a sharp drop in solar stocks on Thursday and Friday. 

Investors chose to largely ignore the fact that the company's profit beat expectations, that its revenue jumped 24% year-over-year, and that it expects its shipment to rise to 11.5 gigawatts to 12 gigawatts this year. The guidance contradicts all of the hand-wringing about a slowdown in demand from China and the supposedly ruinous effects of the U.S. tariffs. Ignore that its "margins and profitability have room to improve" this year, " driven by declining overall costs, increased demand for its advanced technology, expanding opportunities in emerging markets, declining raw material costs, and reduced reliance on finished products made by other companies. 

Furthermore, JinkoSolar said that Chinese average selling prices were "stable" this quarter," adding that although total Chinese demand for solar products could fall slightly, the government would continue to take steps to boost the industry, while the country's residential market is expected to generate "strong growth. Moreover, " demand in Latin America and Australia maintained strong growth momentum and markets in the Middle East and Africa are expected to generate substantial growth," while prices in Japan have also remained "relatively stable" so far this year, JinkoSolar reported. Stable prices in conjunction with dropping costs are, of course, a formula for higher margins and higher profits going forward. 

Although these positive catalysts were largely ignored by investors, they were not completely ignored. JKS stock bottomed around $17.22 on Friday before rebounding to finish the day at $18.46 despite the weak market. And on Monday, JKS stock rose strongly amid the market's broader optimism, finishing the day at $19.48. Other solar stocks also rebounded strongly on Monday, suggesting that investors are beginning to realize that the sector's future is actually quite bright. 

JinkoSolar's revenues are clearly rising rapidly as solar energy proliferates around the world. Although its gross margins fell slightly quarter-over-quarter, it remains profitable and certainly has many levers that it can and will use to increase its profitability going forward. 

As I noted previously, I expect solar stocks to rise sharply over the longer term as the use of solar energy increases rapidly, solar energy prices fall further,and electric cars proliferate, increasing electricity demand and prices and giving utilities more money to spend on solar energy.