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What About Investing in Solar PV Stocks?

Why haven't there been many stories on what a great investment solar PV has been this year? For example, First Solar (FSLR), a maker of solar panels has gone up over 2000% so far this year. Other super investments are SunPower (SPWR) from California or future star Evergreen Solar (ESLR) just going profitable being a new start. They are all American based USA Solar Companies.--Jim Stack, Chandler, Arizona

Mr. Stack you are indeed correct that the common stock of these three companies would have been great investments. They have each had incredible year to date appreciation and as you can see below, they easily out performed the Dow Jones and NASDAQ averages. 

 

Symbol

Company Name

Stock Gain 1/1/07 thru 11/30/07

 

 

 

ESLR

Evergreen Solar, Inc.

70.9%

FSLR

First Solar, Inc.

623.5%

SPWR

Sunpower Corporation

225.8%

 

 

 

Indexes

 

 

 

 

 

DJIA

Dow Jones Average

6.6%

NASD

NASDAQ

10.3%

 

 

 

 

Since these stocks have each done so well I think it may be interesting to ask - what is there about these three stocks that may have made them do so much better than average?

I have followed all three of these stocks since their respective IPO's. I believe that they have done so well because each of these companies has a "differentiating factor" that sets it apart and as a result, they are viewed by Wall Street analysts and investors as being more attractive and consequently are given a higher multiple of earnings or potential.

What are these differentiating factors?

  • Potential Process Innovation - ESLR
  • Lowest Cost - FSLR
  • Highest Efficiency - SPWR

Evergreen Solar - ESLR has a unique technology for making photovoltaic material in the form of a ribbon, rather than an individual solar cell. It has the potential to produce a lower cost product and use significantly less silicon in the process.

First Solar - FSLR is the first "pure play" company** with a commercial product in the thin film area of Photovoltaics. It's product is the lowest cost on the market and has the potential to continue as the low-cost leader.

Sunpower Corporation - SPWR has the highest efficiency product on the market and is also a pure play company. This gives it a market niche in all areas where space is limited and a higher efficiency is needed.

If I am correct about these three stocks, this may be a useful guide to help evaluate other stocks and future IPO's to see if they to, have a differentiating factor that would set them apart and give them an advantage over their competition.

** Pure play company - is a term that indicates that the company has no other business, this is the only product area they are involved in.

J. Peter Lynch has worked, for 30 years as a Wall Street analyst, an independent equity analyst and private investor, and a merchant banker in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this area. He is currently a financial and technology consultant to a number of companies. He can be reached via e-mail at Solarjpl@aol.com.

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