Year’s Best: “The Wal-Mart of Solar Energy”

By Travis Johnson, Stock Gumshoe, December 24, 2007

And as we continue the rundown of the most successful teaser stocks of the year, here’s number two. This is a solar stock, so obviously it has done well this year (I think LDK Solar is the only one to come to mind that hasn’t ramped up consistently nearly all year). And in addition to being the second-best performer among the teaser stocks this year, this is a well known company, a leader in its field that has been recommended by many other newsletters … and, for what it’s worth, the most successful (by far) teaser pick that Tobin Smith has yet sent our way — it’s up over 150% since it was picked at the end of March.

So, without further ado, here’s the original teaser writeup from last Spring — enjoy your Christmas if you’re celebrating that holiday, and I’ll be sending a few more of these “best of” reruns your way in the coming week … and I’ll be back in the new year with all kinds of new teasers and writeups, and maybe a few special goodies for my favorite readers.

This one comes to us from Tobin Smith at ChangeWave, who would like you to sign up for his newsletter service in order to find out about this company, which is his “#1 Must-Own Energy Stock for 2007.”

He blathers on for a bit about the background — solar power is going to be huge, oil prices aren’t going back down, the world demands more power, etc. etc. We’ve heard almost all of this before from lots of different advisors.

And in addition to comparing this company to Wal-Mart, he notes that Wal-Mart is now one of the drivers of cleaner energy adoption and energy efficiency in the US.

The sell at the top of the ad?

“What happens when you do business in a 40% growth industry AND you have a 20% cost advantage over all your competitors?

(I’ll give you a moment.)

You get RICH.”

And who doesn’t like that idea?

Here are the clues he provides:

This is a double play on solar and on China.

“among the world’s top makers of photovoltaic cells and already owns a huge cost-to-performance advantage over most competitors.”

Has “increased manufacturing capacity twelvefold in less than three years. Last quarter, sales and revenues both TRIPLED year-over-year.”

And two very specific hints that make this a pretty easy call:

“The company recently grabbed another big contract in Spain, which will really goose revenues and profits in 2007. When finished, it will be the BIGGEST photovoltaic power plant in the world – covering over 65 hectares with some 120,000 solar modules!”

“This is a China-based company — one you can easily buy right on the NYSE”

So that’s plenty to tell us what Toby Smith’s “Wal-Mart of Solar Energy” is …

We just enter all that data into the Stock Gumshoe cognitationizer, and before you can say “boo” the answer comes out:

Suntech Power (STP)

As I noted a week or two ago when I sleuthed out Robert Hsu’s chinese solar play, Trina Solar, there are only two Chinese solar companies that trade on the NYSE — Trina and Suntech. And although the other numbers given in the tease fit just fine as well, just knowing that it trades on the NYSE and that it got the contract for the massive new solar project now going up in Spain is enough to confirm that Suntech is Toby Smith’s pick.

I’ve actually considered buying shares in this one in the past, too, but don’t currently own them. I can’t argue with the bull case on this, but I’m also not an expert on the compeitive advantages enjoyed by any of the big solar power companies — some of the things you might look into if you’re interested are cost of production, cell efficiencies, reliance on spot polysilicon, which is really expensive right now, or possible innovations to use non-silicon photovoltaics.

But that’s neither nere nor there. The Stock Gumshoe can’t tell you what to buy, just what the newsletter advisors are trying to sell you. Good luck.

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