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In
This Edition... |
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* Another
'Sneak Preview' of Friday's Stock
* The Future
of Solar Power
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Another
'Sneak Preview' of Friday's Stock |
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Don't
forget to check your e-mail sometime after this Friday's close. As we mentioned
last week, you'll find a new company profile then. The Micro Cap Press
editorial staff is putting the finishing touches on our research, and we
believe you're going to be as excited to learn about this company as we
are to present it to you.
 To
hold you over in the meantime, we don't mind divulging some of the
themes we'll be detailing then. In no particular order, we can say these
things about the company:
* Their
2008 Q2 revenue was more than three times that of 2007's Q2 revenue.
* In the last
couple of months, the company has signed contracts worth more than Q2's
(2008) total revenue.
* Those recent
contracts are only about 5% of the orders they already have, and are waiting
to fill.
* The kind
of business they're in is close to being mandated by the government.
* Their product
saves companies money, and helps save the environment too.
As for the rest
of the story, patience - Friday is only a couple of days away.
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The
Future of Solar Power |
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Normally the
Micro Cap Press staff does its own research, finds its own stories, and
comes to its own conclusions. Yesterday, however, an Investor's
Business Daily story hit close to home by touching on one of our adopted
focal points - solar power.
 We're
not going to recap Brian Womack's entire story; you
can read it for yourself here. We just wanted to highlight some of
the points we felt were critical, and add our take.
In a nutshell,
next
year's solar panel demand was expected to shrink, ultimately sending the
price of solar panels lower. That theme has been discussed several
times in 2008, though the IBD story specifically mentioned prices of panels
could sink between 10% and 20%.
Part of the
price drop also has do with supply; there are dozens of companies now manufacturing
and selling solar panels at a pretty brisk pace. So, competition is stiffening
to the point where the technology is starting to trade like a commodity.
The story also
made a point regarding financial incentives, specifically using Spain as
an example. Spain's demand for solar power in 2008 was enormous. However,
it was also highly encouraged by the government's incentive program.
For
2009 though, the incentives are likely to halt. The assumption is that
demand will also freeze, since the technology is rather expensive - up
front - compared to alternatives. In fact, the tapering of demand from
Spain was largely the reason for a less-than-enthusiastic solar panel outlook
for 2009.
If the expiring
incentive story rings a bell, it may be because the United States' government
has also all but dropped incentives to encourage a variety of alternative
energy usage. The end result is the same here - the technology is too expensive
without subsidies, so manufacturers would need to cut prices to spur demand.
If margins are narrow though, cutting prices could push a manufacturer
into the red. See the dilemma?
The key to it
all is something
we mentioned in the blog back in July. Ultimately, for a solar panel
company to be successful, they have to be able to create electricity for
the equivalent to somewhere between 8 and 12 cents per kilowatt hour...without
subsidies. Some are getting close, but some of those also rely on help
from the government.
 The
good
news is, as the technology advances it becomes cheaper and more effective.
The even better news is, polysilicon (the key component and expense
of solar panels) prices are starting to taper off. The bad news
is, it still may not help enough to offset the loss of any financial incentives
in whatever country is in question.
That's been
one of the big challenges (if not the biggest) with alternative
energy investments. The ideas are brilliant, but so far are relatively
expensive compared to traditional energy creation. These companies will
have to be viable on their own to get past any legislative risk, since
the subsidies won't always be there. Some companies will achieve it, while
others won't. We suspect this will be at the core of any discussions and
analysis going forward.
By the way,
this is an idea that will have even more meaning - in a good way -
when you read Friday's company profile.
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Updated: 9:18 am PST (17:18 GMT), January 5, 2009
