The last few months solar took a beating on fears that tax credits would expire at the end of 2008. Well that changed as we got word that the senate will provide 17 billion in tax credit extending until 2016.
Now keep in mind that US companies will benefit most from this, so my top picks in the space are: SunPower Corporation [[SPWR]] , First Solar, Inc. [[FSLR]] , Energy Conversion Devices, Inc. [[ENER]] & MEMC Electronic Materials, Inc. [[WFR]] .
However, I think the opportunity to bank some coin lies within MEMC Electronic Materials, Inc. [[WFR]] . The decline in share price has become absolutely ridiculous, it’s current multiple reflects no growth when in fact the company is growing at a 30% clip over the next five years. This is a company that can’t meet demand!
WFR also has 1.4 billion in cash, no debt, and a historic low 6X forward multiple. With WFR guiding higher coupled with overblown concerns on the closure of the Pasadena plant due to Ike , I say this coiled spring is ready to shoot higher. I’m placing a short term $40 price target on the stock, a 30% increase from current levels.
Now let’s look at technicals:
We have the MACD & RSI turning bullish with STO not far behind, not to mention a nice rounding bottom formation– all bullish signals.
Disclaimer: Long WFR
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Yes! i’m jumping in LDK again. And hopefully get back in JASO and maybe ENER. I actually i thought Monday was the deadline for the legislation, but I’ve been slacking in tracking them.
HEES – what happened on the 23rd Sept?
Link to SEC documents http://tinyurl.com/4qreek
Three directors appear to have been granted shares for $0. The number of shares is only 16406 shares, so that is not what diluted the shares and caused them to drop 28%.
A private hedge fund in NY disposed of 14,417,521 shares for $0. Shares outstanding was 35M. This is the part I do not get. Why for $0? The private equity company Bruckmann Rosser Sherril and Co now has no shares in the company. Mr Bruckmann is still a Director. What happened to these 14M shares ?
See SEC filings here.
http://tinyurl.com/3txp3d
http://tinyurl.com/3tq9kz
Company has been buying back stock, in the $13-14 range previously and had $8 million cash, and authorization to buy back $54 million more.
Any ideas? Value or disaster ?
Didn’t LDK offered secondaries? If so I will stay away for a while.
Nice find amidst the rubble. Looks like an easy double from here…
I do business with Evergreen- Great things are going on with the company. I would buy some out of the money calls and sit on them for a year.
Just do it:).
Why WFR when LDK is bringing their main plan on-line and will be the industry leader in production capacity. WFR has no capacity and higher costs. Just bottom feeding this stock or is there more to it?
I was looking at LDK’s chart and it reminded me that it was at $75 this time last year just prior to the accounting scandal. The stock has basically done nothing in a years time. 2009 should be diff. Solar’s pretty mixed if you look at what the stocks have done in 1yr’s time.
LDK is good, however it is a Chinese company. I’m sticking with the good ‘ol USA and my pick is WFR.
Short term price target $40.
Actually, I had the CFO of LDK yell at me that they are an international solar company. Their charter is in the Caymans. He was sensitive being lumped in with Chinese companies.
What GTM said you cracker!
Tell me something I don’t know.
Maybe you can tell me if they get a piece of this 18 billion tax credit. Actually, don’t tell me because my concern is with WFR.
As far as I know, only US companies will benefit from the new bill.
Not so, RC.
The credit goes to the buyer of the system. They can buy any qualifying system, and the qualifications don’t require a US-made system or components.
Thanks for the update Ottnott
RC in all seriousness…the one company that will probably appreciate the most from this bill is Sunpower. They are splitting from 52% Cypress ownership (forget the actual date) AND if I’m not mistake they have the largest signed solar contract with PG&E to build a facility starting next year. PG&E said that deal goes no where without the tax credits. Not to mention Sunpower has the most efficient solar cell in the industry. FSLR is crap, pure garbage compared to what Sunpower is accomplishing. They are both a producer AND an installer.
I can tell you that Cypress’s CEO spent a pretty penny getting his shares in place for the SPWR CY split. He has a huge personal stake in SPWR continuing to doing well.