Dr. Kent Moors, who teaches political science at Duquesne and is an expert consultant on oil and gas topics, launched a newsletter with one of the many hype-crazy Agora-related publishers last year (Money Map Press, if you’re keeping track, itself a spinoff of Oxford Club if I’m keeping the spaghetti strands in order). In fact, his little part of the Money Map fiefdom is a clinic on building and harvesting a mailing list — he starts with the free Oil & Energy Investor, upgrades folks to the newsletter he’s teasing here today, Energy Advantage, and then, once you’re accustomed to paying for his recommendations he promises even grander profits from his more expensive and exlusive “trading service,” The Energy Inner Circle.
So as they build up that Energy Advantage mailing list, they’re now pitching subscriptions for $50 — “half price” from what the normal hoi polloi would pay, naturally, because you are so special. But just in case you’re curiou about one of those “quadruple your money” opportunities he teases in the ad and don’t really feel like subscribing to another letter at the moment, I thought I’d sniff out a few answers for you.
The ad — you can read it here if you’re so inclined, or listen to the interminable “presentation” — tells us that the best breakthrough ideas will come from companies who can make energy more efficient, improve green energy technologies, etc., everything from switchgrass ethanol to smart grids.
And lest you think that Dr. Moors is out to line his pockets and bolster his retirement in his spare time (and as a former academic, I can tell you that he almost certainly has a lot of spare time for his consulting and newsletter gigs), he spins it this way for us:
“What it is that I know is going to benefit YOU in high profits in this new energy market.
“But there’s also another reason why I want to give this advice directly to you.
“This market, to remain stable… this market, to maximize its profits… needs liquidity coming from thousands of small retail investors.
“Retail investors, who have longer-term prospects – who are looking at the real interest of the market – rather than making short-term profits, as many of the larger hedge funds do.
“With more small retail investors – like YOU – coming into the market, not only do you profit, but the market profits.
“And so, from that standpoint, this service is important… not simply to the investor, but also to the market itself.”
Man, I’m going to have to start using that line, too — not only am I trying to inform individual investors, but my Gumshoe blather is important to the market itself. I don’t even know what that means, but I like the sound of it. Time to print up some business cards
But anyway, here’s the idea teased for you that he says you can “take to the bank right now.”
“It’s around $4 a share – for now – and should QUADRUPLE your money within the next 8 to 12 months…
“By enabling solar power to connect directly to the existing power grid, this could be the most profitable ‘energy bridge’ ever built.
“It’s already in wide and expanding use worldwide for one simple reason: It reduces loss of power (and therefore INCREASES efficiency and REDUCES cost) at every step in the process.
“That allows larger solar complexes to suddenly become extremely profitable….”
OK, that sounds pretty good. I actually have no idea that there was any problem in connecting solar power to the grid, so perhaps I’m learning both about a problem and a solution today. I love a completed circle.
“This technology enables giant solar farms (and wind farms, too) to “plug” right into the existing grid and add electricity to the supply.
“Think of it as an extremely sophisticated version of one of those adaptors you attach to 3-prong appliances so you can plug into any 2-hole outlet. Without the adaptor, you can’t even connect. But with the adaptor, everything works perfectly. This single development takes solar energy from the realm of science fiction and transforms it into a catalyst for unimaginable wealth.”
Seriously, has this been a problem? I’ve seen the solar companies teased for years now, and I can’t say this problem has ever gotten much attention — I thought the problem was clouds and darkness, not the method of plugging your panels into the system.
Anyway, some more details to help us narrow down the list of companies?
“Mark this day on your calendar. It’s the moment in history that solar power became the real deal.
“This company’s technology does for electricity generation what the silicon chip did for the personal computing industry – it makes solar energy affordable and brings it to the masses! …
“… I happen to be one of the few people who knows the intimate details about the tiny company that has single-handedly developed the technology that makes that kind of leap possible.”
OK, so that’s not details — but the letters from Dr. Moors have been so boastful in the past that I couldn’t resist including that last sentence. (And yes, I happen to be one of the few people who knows the intimate details of which button to press on the Gumshoe HQ microwave to most efficiently warm a burrito. And I’m not telling.)
There are a few more details for you, though — including info about some customers, which should help the mighty Thinkolator do its work:
“The company supplied inverters for China’s largest solar plant and rooftop projects. They were just installed in two major cities. And that puts it on the short list of companies that will help China meet its 20-GW commitment to solar energy.
“Last year, a combination of 12 of the company’s breakthrough inverters was used in a 1.2-MW solar power station at a water treatment facility in Kent County, Delaware. This is the first example of a seamless and fully integrated system – from energy generation to grid application.
“The company was selected for the 63 megawatt CIRO One Solar PV Plant in Puerto Rico, one of the first of many breakthroughs in utility-scale solar power plants.”
“The company just announced that it has been selected to supply its inverters for Germany’s new 19.5-MW utility-scale solar project – one of the country’s largest.”
Well … that oughtta do it. The Thinkolator had a breezy weekend, so before I’m even done pouring in the info the answer comes tumbling out the other end … this is Satcon (SATC)
And no, I had never heard of them before this moment. They are, so they tell us, the maker of world class equipment for utility-grade solutions for solar power, including inverters and panels and grid interconnects and, well, stuff. I don’t know how it works, but they show lots of pretty pictures of solar panels and Satcon-branded beige boxes on their website, and apparently those beige boxes hold fabulous energy management systems and highly efficient inverters that help to make utility-scale solar projects most effective and efficient.
I assume that they have competition in this space, since there are so many massive electrical equipment companies — mega-companies Siemens and GE both make solar inverters too, for example, so if it’s true that Satcon’s equipment is “best in class” as they claim, that’s pretty impressive … and might even make them a tempting takeover target at some point (that’s just a wild speculation).
What’s more interesting is that Satcon is a good size, market cap of $425 million (big enough to be fairly stable, small enough to get a kick from a few big projects), and it might be deserving of that most favored of Gumshoe adjectives: cheap.
They don’t have any net debt after raising some money back in October at $3.90 per share, and they haven’t posted a profit yet, but if you believe the analyst estimates (this company has 10 analysts following the stock, a huge number considering their small size) they are on the cusp of becoming very profitable, and they trade for just 20X expected 2011 earnings (and less than 10X expected 2012 earnings). Do note, however, that this sure wouldn’t be a favorite of momentum traders at the moment — the shares are down sharply since their last earnings release, and though the stock trades for just 20 times this year’s expected earnings, that forecasted number has dropped by about 30% in the last month. This is a pick for value investors, not for those looking to lasso a rocket that’s already burned a lot of fuel.
There’s also a slightly larger company (twice the market cap, but still far smaller than the big guys) in this space that you might have heard of — Power-One (PWER), which also gets much of its revenue from inverters … and which is even cheaper with a trailing PE of 9 and forward PE of about 6, so clearly someone is worried about the future for these stocks, good and growing businesses shouldn’t be this inexpensive.
Part of that is certainly the “big picture” for solar — what the subsidies will be, how regulations will favor solar (or not) in the years to come, whether the big push for huge solar arrays will continue or if the smaller, infill and rooftop projects will get more attention, etc. But it also seems particularly difficult to forecast company earnings when they’re at “becoming profitable” transition points like this, especially because companies really, really like to tell you that they’re just about to become profitable … and Satcon just did disappoint investors a bit with their slightly-below-expected results in the fourth quarter (analysts expected that to be the first profitable quarter and it wasn’t, now they expect the March or June quarter to get that nod) and, probably more importantly, a revenue forecast that fell below analyst expectations.
That disappointment brought the shares down hard, just as similarly disappointing news did for Power-One around the same time, so if you think the outlook for Satcon’s products is good and believe that we’ll continue to see more utility-scale solar projects, perhaps we’ve got a buying opportunity — the shares were at $5 before the disappointing news, and are right around $3.60 now.
That’s about all I know about Satcon — I’m quite sure this is a match for Moors’ hints (they did just announce that 19.5 MW deal in Germany back on February 15, for example, and their 12 inverters that were chosen for the Delaware “Showcase” project were announced back on October), but I don’t know what the future holds for the business or the company. I admit to being quite intrigued by Satcon and their enticingly low valuation — perhaps even more than the bigger and cheaper Power-One, due to Satcon’s seemingly stronger focus on utility projects — but I have just started to look at the shares. I’m sure that there are legions of Gumshoe readers who have more wisdom than I can share about power inverters, the utility-scale solar business, and the competitive position of Satcon versus their many competitors, so if you dig into the stock (or have already dug) and feel like sharing, please do so with a comment below. Thanks!
And of course, if you’re a subscriber to the good Dr.’s Energy Advantage, we want to know what you think — dynamo or dud? Share your opinion with your fellow investors with a review at Stock Gumshoe Reviews by clicking here. Thanks!
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