Ext User(Souls Black as Coal)
20-04-2007, 02:13 PM
http://energy.seekingalpha.com/article/30647
Power Inverter Stocks: A Back Entrance to Solar and Wind Energy
Posted on Mar 26th, 2007 with stocks: SATC, SPIR, WFR, XARXF.PK
Tom Konrad (AltEnergyStocks) submits:
Avoiding the Rush
Whenever there is a gold rush, the people who make the real money are
seldom the gold miners, but rather the suppliers to the miners that
come home with the lion's share of the profits. This is not because
there is not an incredible amount of money to be made in mining gold,
but because the nature of a gold rush is that too many optimistic
miners are encouraged by the early profits of a few to rush to pursue
too few opportunities.
To many, the rush into solar stocks seems to be just that sort of gold
rush. The boom in solar IPOs certainly reminds me of the type of
feeding frenzy in which incautious investors are likely to get burned.
And we are also seeing some other signs of rampant speculation, where
investors are buying poorly managed (or even dishonest) companies with
almost the same fervor of well managed ones. There's little doubt that
the future is bright for solar power, but picking solar companies that
are going to survive and thrive in that bright future is becoming
increasingly difficult in an increasingly crowded field.
Things That Photovoltaic Makers Need
In a gold rush like this one it makes more sense to look at the
suppliers. The most obvious suppliers for solar photovolatic [PV]
manufacturers are the suppliers of solar grade silicon, from which
most PV panels are made. This is what I was doing during last summer,
and my favorite silicon supplier, MEMC Electronic Materials (WFR) has
doubled since then (a much better performance than I was expecting in
such a short time.) I have since taken most of my (and my clients')
gains. With many wondering how long the silicon supply shortage will
last, and the explosion of companies advancing thin film and
concentrating photovolatic technologies to get around the shortage, it
seems simpler to get off the silicon roller coaster than to predict
when prices will peak or guessing which technology will be the most
economic in a couple years.
Thinking about suppliers to PV manufacturers, we might also think of
Spire Corp. (SPIR), which supplies solar manufacturing equipment, but
that stock is also trading at its 52-week highs, and is up about 50%
in the last six months, and has tripled in the last five years, yet is
still unprofitable.
While I'm used to investing in unprofitable companies, I prefer to buy
out-of-favor unprofitable companies, rather than ones that have
recently had a big run-up. Which brings me to my current favorite
supplier to the PV industry: makers of the inverters which convert DC
power from PV panels into the AC power used by most of our appliances
and the grid. (Small inverters are also used in campers to provide A/C
power for portable TVs and other electronics.)
Wind turbines also use a similar device called a converter, although
wind converters convert the "wild AC" produced by wind turbines into
the more domesticated variety used on the grid. Many manufacturers
make both PV inverters and wind converters. Many also make power
supplies which convert AC to DC power, since these are basically
inverters operating in reverse.
North American Stocks
Here is a run-down of the major manufacturers traded in the U.S. and
Canada:
Xantrex (XARXF.PK) makes a range of solar from 10 to 225 kW and wind
converters for turbines up to 1.5 MW. They are also well established
small inverters for cars and campers and other power conversion
products.. And, unlike many other alternative energy companies, they
have had profitable years in 2005 and 2006. This is likely the safest
investment among power electronics manufacturers, but by the same
token, has the least possible upside. Xantrex's stock has been flat
for the last couple years (after falling about 40% from its IPO in
2004: not a lot of excitement here, which is exactly when I like to
invest.
SatCon Technology Corp. (SATC) operates in a broad range of power
electronics businesses, including grid support and power quality, as
power conversion. Their wind converters are designed for turbines from
250kW to 2MW and larger. Their PV inverters are designed for systems
from 30-500kW in size. SatCon is not currently profitable, and is
unlikely to become profitable in the next couple years, but the
earnings trends seem to be in the right direction, and they are in the
rapidly growing industrial segment of the market. SATC also fell
immediately after its IPO in 2002, and has been gyrating rather wildly
since then. It's currently down about 60% from its price at the IPO,
and seems to be showing some signs of life.
Sustainable Energy Technologies (STGYF.PK) makes a low voltage
inverter suitable for residential sized systems and charging battery
backups that they market as having superior efficiency and
reliability, which they also market for use with fuel cells. In
addition, they sell a vertical axis wind turbine. STG is definitely
the most speculative of the three, but also the greenest and purest
play on alternative energy. Given its speculative nature, it's
probably best to wait for a pullback before investing.
These companies do not have the market to themselves by any means;
major competitors include the private German Companies SMA (Sunnyboy
inverters and Windyboy converters) and Fronius. Nevertheless, there is
little excitement around the stocks (except for STG which is such a
tiny company that the only limit on its stock price is speculators'
greed) and yet they have as much potential to benefit from the growth
of Solar as do the much hyped solar stocks.
Full Disclosure: Tom Konrad and/or his clients have positions in the
following stocks: WFR, XARXF.PK, SATC, STGYF.PK.
Power Inverter Stocks: A Back Entrance to Solar and Wind Energy
Posted on Mar 26th, 2007 with stocks: SATC, SPIR, WFR, XARXF.PK
Tom Konrad (AltEnergyStocks) submits:
Avoiding the Rush
Whenever there is a gold rush, the people who make the real money are
seldom the gold miners, but rather the suppliers to the miners that
come home with the lion's share of the profits. This is not because
there is not an incredible amount of money to be made in mining gold,
but because the nature of a gold rush is that too many optimistic
miners are encouraged by the early profits of a few to rush to pursue
too few opportunities.
To many, the rush into solar stocks seems to be just that sort of gold
rush. The boom in solar IPOs certainly reminds me of the type of
feeding frenzy in which incautious investors are likely to get burned.
And we are also seeing some other signs of rampant speculation, where
investors are buying poorly managed (or even dishonest) companies with
almost the same fervor of well managed ones. There's little doubt that
the future is bright for solar power, but picking solar companies that
are going to survive and thrive in that bright future is becoming
increasingly difficult in an increasingly crowded field.
Things That Photovoltaic Makers Need
In a gold rush like this one it makes more sense to look at the
suppliers. The most obvious suppliers for solar photovolatic [PV]
manufacturers are the suppliers of solar grade silicon, from which
most PV panels are made. This is what I was doing during last summer,
and my favorite silicon supplier, MEMC Electronic Materials (WFR) has
doubled since then (a much better performance than I was expecting in
such a short time.) I have since taken most of my (and my clients')
gains. With many wondering how long the silicon supply shortage will
last, and the explosion of companies advancing thin film and
concentrating photovolatic technologies to get around the shortage, it
seems simpler to get off the silicon roller coaster than to predict
when prices will peak or guessing which technology will be the most
economic in a couple years.
Thinking about suppliers to PV manufacturers, we might also think of
Spire Corp. (SPIR), which supplies solar manufacturing equipment, but
that stock is also trading at its 52-week highs, and is up about 50%
in the last six months, and has tripled in the last five years, yet is
still unprofitable.
While I'm used to investing in unprofitable companies, I prefer to buy
out-of-favor unprofitable companies, rather than ones that have
recently had a big run-up. Which brings me to my current favorite
supplier to the PV industry: makers of the inverters which convert DC
power from PV panels into the AC power used by most of our appliances
and the grid. (Small inverters are also used in campers to provide A/C
power for portable TVs and other electronics.)
Wind turbines also use a similar device called a converter, although
wind converters convert the "wild AC" produced by wind turbines into
the more domesticated variety used on the grid. Many manufacturers
make both PV inverters and wind converters. Many also make power
supplies which convert AC to DC power, since these are basically
inverters operating in reverse.
North American Stocks
Here is a run-down of the major manufacturers traded in the U.S. and
Canada:
Xantrex (XARXF.PK) makes a range of solar from 10 to 225 kW and wind
converters for turbines up to 1.5 MW. They are also well established
small inverters for cars and campers and other power conversion
products.. And, unlike many other alternative energy companies, they
have had profitable years in 2005 and 2006. This is likely the safest
investment among power electronics manufacturers, but by the same
token, has the least possible upside. Xantrex's stock has been flat
for the last couple years (after falling about 40% from its IPO in
2004: not a lot of excitement here, which is exactly when I like to
invest.
SatCon Technology Corp. (SATC) operates in a broad range of power
electronics businesses, including grid support and power quality, as
power conversion. Their wind converters are designed for turbines from
250kW to 2MW and larger. Their PV inverters are designed for systems
from 30-500kW in size. SatCon is not currently profitable, and is
unlikely to become profitable in the next couple years, but the
earnings trends seem to be in the right direction, and they are in the
rapidly growing industrial segment of the market. SATC also fell
immediately after its IPO in 2002, and has been gyrating rather wildly
since then. It's currently down about 60% from its price at the IPO,
and seems to be showing some signs of life.
Sustainable Energy Technologies (STGYF.PK) makes a low voltage
inverter suitable for residential sized systems and charging battery
backups that they market as having superior efficiency and
reliability, which they also market for use with fuel cells. In
addition, they sell a vertical axis wind turbine. STG is definitely
the most speculative of the three, but also the greenest and purest
play on alternative energy. Given its speculative nature, it's
probably best to wait for a pullback before investing.
These companies do not have the market to themselves by any means;
major competitors include the private German Companies SMA (Sunnyboy
inverters and Windyboy converters) and Fronius. Nevertheless, there is
little excitement around the stocks (except for STG which is such a
tiny company that the only limit on its stock price is speculators'
greed) and yet they have as much potential to benefit from the growth
of Solar as do the much hyped solar stocks.
Full Disclosure: Tom Konrad and/or his clients have positions in the
following stocks: WFR, XARXF.PK, SATC, STGYF.PK.