Energy Advantage teases: “This New Fuel will Kill Big Oil… This amazing breakthrough transforms seemingly worthless pieces of land around the world into energy-producing powerhouses.”

Kent Moors says, "If you could only own one solar company for the next 10 years, this would be the one."
. Latest touts are headlined, "Stunning Chemical Engineering Breakthrough Unlocks 36,000 Years' Worth of FREE, RENEWABLE FUEL for the ENTIRE PLANET!"

By Travis Johnson, Stock Gumshoe, January 8, 2019


The first version of this article ran way back on March 30, 2016, so it might look familiar to a lot of you — but a few folks asked about it today, and it looks like the ad is running again, still without much change to the spiel, so I’m re-publishing this teaser solution. I’ve made some mild updates to these introductory paragraphs, and added some comments to the bottom, but a lot of the article (and the ad) is word-for-word the same as it was three years ago.

Three years? Yep, before that March 2016 update, there was also a previous version of this Dr. Kent Moors “New Fuel Will Kill Big Oil” and “Magic Sand Power” pitch, back in the Fall of 2015. The stock he pitched so aggressively starting back then as the “greatest leap of mankind” stock for “free energy” had been crushed… and I kept seeing the same ads for his Energy Advantage, continuing to tease the stock, all the way down. Even as the company was filing for bankruptcy, the ad kept running.

But, apparently eager to keep using a sales pitch that must have been working nicely to bring in subscribers, they carefully swapped out the hints about that failed stock and inserted hints about a new one sometime in early 2016. The ad that started then is still running today with almost no changes (I just received it again, though it’s got an April 2018 date below the signature now), though, of course, it teases a different company.

Which is probably a good thing — that first ad from 2015, which many of you no doubt remember for the pictures of deserts and the implication that his favorite stock had found a new way to generate electricity from grain of sand, was focused primarily on SunEdison (SUNE, which delisted and became SUNEQ before disappearing entirely), which was one of the worst blow-ups in the market shortly after that as they used hedge fund-suggested financial engineering and heavy debt to grow rapidly and finance new solar installations and expansions… then fell on their face when the “cheap financing” provided by that financial engineering proved to be unsustainable and they filed for bankruptcy protection from their creditors.

The newer ad that’s been running since 2016, with some variations, still has those zoomed in photos of sand, the talk about how big corporations like Google and Facebook and Costco are depending on this “new fuel”, and the general pitch for solar power. That’s essentially the same, with minor updates, as the ad that touted SunEdison.

I don’t actually know what Dr. Moors suggested to his subscribers as SUNE fell, or when — maybe he had them out of it at $3 or $2 or something along the way and shifted course, or maybe he remained convinced that their technology and their market presence will give them the chance to dig their way out and he never sold as it dwindled to zero. We’ve left the original comments appended to this article down at the bottom, so you can see what some folks shared about it at the time, including some folks who said they were subscribers to that newsletter.

So Dr. Kent Moors, thankfully, has been teasing someone else in solar. So who is it?

—The balance of this article, other than the updated info at the bottom, is unchanged from March 30, 2016. Assuming that the Thinkolator was correct, the stock being teased is down about 45% from where it was on that day… or if you had waited until this year’s version of the ad started in April, you’d only be down 37%–

Let’s check the clues. This is from the newest version of the ad that I got today:

“And while there will be numerous plays coming down the pike, you will NEVER have another opportunity like you have today – right now!

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“You see, at the center of this energy revolution sits one tiny company that’s about to go from virtual obscurity to household name.

“Their revolutionary technology has completely transformed the way this fuel is harvested.

“At the same time, they have over 130 patents protecting their market share.

“To say this company is in the driver’s seat would be an understatement of epic proportions.

“At this moment, every major energy player on the planet is banging on their door looking for cheap energy.

“Their client roster is a ‘who’s who’ of global energy players, and they are poised for a global rollout of unprecedented proportions

“In short, the upside is staggering…

“Remember, Google, Walmart, Facebook, Apple, and the U.S. Department of Defense are making massive investments into solar. And with 130 patents, this company is in the driver’s seat.”

That might sound really, really familiar — and it is almost identical to the ad that was sent around in 2015. Here’s the version that was teasing SunEdison back in November:

“You see, at the center of this energy revolution sits one tiny company that’s about to go from virtual obscurity to household name.

“Their revolutionary technology has completely transformed the way this fuel is harvested.

“At the same time, they have over 750 patents protecting their market share.

“To say this company is in the driver’s seat would be an understatement of epic proportions.

“At this moment, every major energy player on the planet is banging on their door looking for cheap energy.

“In fact, their client roster is a ‘who’s who’ of global energy players.

“They’ve already locked in enormous long-term deals with the likes of Walmart, Google, the U.S. Department of Defense, and New York City.”

See those little changes to the specifics? No longer are we dealign with a company that has 750 patents and long-term deals with Walmart, Google, etc… now we’re dealing with a company that has 130 patents, and is in the driver’s seat for solar energy, which is also an area were Google, Walmart, etc. are making big investments, but isn’t necessarily specifically working with those mega companies.

The marketing spiel ends up giving the same impression, but the specifics are different. And, one assumes, the company being hinted at is now different — apparently Dr. Moors believes that SunEdison has fallen out of “the driver’s seat” and been replaced by a substitute driver at some point in the last few months.

So who might it be? This is what we get by way of clues:

“I’d like to introduce you to an extraordinary company.

“It is, quite literally, the SPARK that put solar on the fast-track to total domination of the global energy markets.

“If you could only own one solar company for the next 10 years, this would be the one.

“There’s no doubt in my mind…

“Remember, the energy sector is responsible for rare and exceptional trades big enough to turn $1,000 into $1 million in a single transaction.

“And while there are no guarantees, this ‘premier’ solar company could be the biggest win we’ve ever seen.

“Not just in the energy sector, but in financial history.

“Let me give you the facts…

“Own the Next Super-Major Energy Titan for Pennies on the Dollar!”

Huh. No actual clues in there, eh? That is, in fact, word for word, exactly the same thing he said about SunEdison back in the prior version of the ad.

Just a reminder to keep ahold of a healthy handful of skepticism whenever a pundit says “there’s no doubt in my mind” or “if you could only own one [company] for the next 10 years, this is it.”

So do we get anything else that might be a bit more specific about the substitute for SUNE in Moors’ affections?

Here are the hints from the old SUNE pitch:

“It’s a complicated process, and this company has taken it to a whole new level.

“You see, in its raw form, Si is full of impurities…

“These impurities inhibit the conversion process, making for expensive energy, once as high as $76 per KWH.

“That’s what makes this company’s patented technology such a remarkable breakthrough.

“During the process, very small particles of Si called ‘seeds’ are suspended in a cloud of gas.

“Si in the gas attaches to other Si particles, forming larger and larger beads.

“These beads eventually drop out of the gas like rain…

“The beads are then melted and formed into wafer-thin slices of 99.99% pure Si…

“The technology is 1,000% more efficient than the industry standard.

“And the big thing: The cost…

“Again, traditional solar cells delivered energy at a cost of $76 per KWH.

“This company’s technology is so efficient, and creates such pure Si, they are supplying a utility company with solar at 5 cents per KWH.

“That’s right. This company’s technology is so significant that utility companies are throwing in the towel and buying solar power!”

And now, from the updated pitch for the new mysterious solar company:

“It’s a complicated process, and this company has taken it to a whole new level.

“You see, in its raw form, Si is full of impurities…

“These impurities inhibit the conversion process, making for expensive energy, once as high as $76 per KWH.

“That’s what makes this company’s patented technology such a remarkable breakthrough.

“First, raw Si is melted in a mono-crystalline electric furnace.

“During the melting process, a stream of Argon is pumped into the furnace to remove impurities and inhibit oxidation.

“The molten Si is then cast into square blocks and cooled.

“The blocks are then sliced into wafer-thin slices of pure Si…

“The technology is scientific genius and creates highly purified Si, ready to convert sunlight into ready-to-use power.

“In fact, this tiny company’s patented solar cells set a NEW WORLD RECORD for power output.

“Incredible… and the big thing: the cost…

“Again, traditional solar cells delivered energy at a cost of $76 per KWH.

“This company’s technology is so efficient, and creates such pure Si, they are supplying a utility company with solar at 5 cents per KWH.”

Seriously? Those, again, are almost identical. Are there really two “remarkable breakthroughs” from different companies? Or did the copywriter just tinker slightly with the ad so it could apply to someone aside from SUNE?

Well several solar cell manufacturers over the years have set “world records” of various types — including efficiency, cost, output, etc. But if you’re talking about this particular silicon manufacturing process, and a world record for power output, and 130 patents, then what Dr. Moors is teasing this time around is JinkoSolar (JKS).

About which I know almost nothing — but it has not, at least, fallen apart like SunEdison. They are, like SunEdison, vertically integrated — they process their own silicon, including recycling, and create their own wafers and build their panels, but they also do develop solar power projects. Here’s how they describe themselves:

“JinkoSolar (NYSE: JKS) is a global leader in the solar industry. JinkoSolar distributes its solar products and sells its solutions and services to a diversified international utility, commercial and residential customer base in China, the United States, Japan, Germany, the United Kingdom, Chile, South Africa, India, Mexico, Brazil, the United Arab Emirates, Italy, Spain, France, Belgium, and other countries and regions. JinkoSolar has built a vertically integrated solar product value chain, with an integrated annual capacity of 3 GW for silicon ingots and wafers, 2.5 GW for solar cells, and 4.3 GW for solar modules, as of December 31, 2015. JinkoSolar also sells electricity in China, and had connected approximately 1,006.6 MW of solar power projects to the grid, as of December 31, 2015.”

They are not nearly as levered as SunEdison, which isn’t saying much — they have boosted their borrowing over the past couple years, so they have about $2 billion in debt matched by about $800 million in cash at the end of 2015, though they also have a much larger “accounts payable” line than they do “accounts receivable” — so it’s a larger operation than is indicated by the market cap of only $600 million. Their revenue has doubled over the past couple of years, and they have been profitable for a couple years, so presumably they can handle that leverage. On an Enterprise Value/EBITDA basis they’re in a fairly similar valuation neighborhood to both industry giant First Solar (FSLR) and the similarly sized Chinese solar company Canadian Solar (CSIQ) — JKS is at EV/EBITDA of 8.5, FSLR and CSIQ are both around 7.

When it comes to earnings, analysts expect that JKS will earn $5 a share this year and boost that by about 15% to $5.78 in 2017… which means there’s obviously some risk or fear in there that I don’t know about, because that means JKS is trading at only 4X expected earnings for the current year. That doesn’t generally happen unless a lot of investors smell a rat or are panicked about a sector. It could just be that analysts have no idea how to guess at earnings — JKS reported earnings that were dramatically worse than expectations for the first three quarters of last year (as in, 50% lower than expected), but then also reported earnings for that final quarter that were more than 30% higher than expected. So I’d use those analyst forecasts sparingly, don’t count on them too much. For actual trailing earnings, JKS earned about $3.30 a share in 2015 — so even on that metric it’s not terribly expensive at about 7X trailing earnings.

So… why is it so cheap in a sector that is generally seeing top line growth? Is it just that their earnings have fallen by about 25% a year over the last several years? Is it fear of the sector because of price competition? Are people still just afraid of all Chinese solar stocks because of the horror stories of fraud and the worry about being unable to trust numbers from some Chinese companies?

I have no idea, I’m afraid… but I am sure that the Thinkolator is accurate in telling us that Dr. Moors has thrown his weight behind JinkoSolar as the standard-bearer for solar power.

And now that we’re in late 2018, three years after Moors initially tantalized us with tales of SunEdison’s might and then shifted gears to focus on JinkoSolar a few months later, are there any other updates to the spiel above?

Well, there were some minor changes along the way — JinkoSolar now has more patents, 200 patents with another 102 pending, Moors says. And the price of solar energy has continued to fall precipitously, those ads from a couple years ago touted the exciting breakthrough that let them sell solar electricity at five cents per kilowatt hour, and that best price has now been cut in half to 2.4 cents.

And yet, this is what the share price has looked like for JinkoSolar:
JKS Chart

The valuation is still cheap for JKS on an absolute basis, they have a trailing PE of about 9 now, and analysts think they’ll end this year with about $1.50 in earnings — that’s a lot for an $11 stock. But they also don’t see any revenue growth over the next few years, so earnings are mostly predicated on them somehow improving their profit margins — they’ve had fairly flat revenues over the past two years, and profits have varied wildly, so maybe they will become more profitable… I dunno. They are obviously and clearly impacted by trade war chatter, and by stricter US import rules for solar panels that came into play before the broader trade war craziness, so it’s probably foolhardy to try to predict the future with any precision.

They are still growing in terms of production and units sold, they had a record shipping quarter last time out (three gigawatts, almost), and that helped to boost their earnings and support the stock, and they have announced some big deals to supply panels for large projects in Vietnam and Nevada in recent months. Debt is still a concern, as interest costs rise, but they have a lot of cash on hand so they’re not in any immediate danger.

Think it will work out? Have other favorites in the space? Here’s a bit of perspective on some of the other solar stocks that jumped to mind, and how those stocks have done since this ad started running — you’ll see JinkoSolar there in blue, not quite the worst performer but beating only ReneSola (SOL), while First Solar (FSLR) is fairly close by and Canadian Solar (CSIQ) and Sunrun (RUN) have bested JKS pretty nicely… but even the solar ETF (Invesco Solar ETF, ticker TAN) has lost value over those 32 months.

JKS Total Return Price Chart

JKS Total Return Price data by YCharts

Have a favorite on that list? Prefer some other solar player? Let us know with a comment below.

P.S. If you’re wondering about the other two companies Moors is pitching in this ad, those appear to be unchanged — still Solar Window (WNDW) for their experimental “solar panel” windows for skyscrapers, and Tesla (TSLA) for their Powerwall battery that can provide “nighttime solar.” We covered those two in the follow-up article here, my opinion on them hasn’t changed. Tesla is hot again of late and is up 65% since November of 2015, when I first covered that Energy Advantage teaser… WNDW is up about 18%, thanks largely to some recent strength on the back of a financing deal and an early stage “alliance” with an equipment provider, so if you had put equal amounts into those two stocks you would be up about 41%, a bit better than the S&P 500’s 36% return (if he had started with JKS instead of SUNE back then in a three-stock “solar” portfolio, that would have returned 12%… if investors had stuck with SUNE after that first November 15 teaser pitch, then a portfolio of SUNE, WNDW and TSLA would have resulted in a 6% loss).


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robert easton
robert easton
4 years ago

travis, thank you for your excellent sleuthing. dr more recommended to bail out of SUNE yesterday. here is a copy of his release:
Action to Take: Sell SunEdison Inc. (SUNE) at market.

Urgent Update Re: SunEdison
By Dr. Kent Moors

Dear Robert Easton,

This morning, I woke to the disturbing news that SunEdison Inc. (SUNE) is under SEC investigation for having mislead investors about how much cash it had on hand.

I’m furious, as I’m sure many of you are.

I first added this company to the Energy Advantage Portfolio on the basis of its phenomenal potential, and I recommended that you stay in through all its temporary volatility because the company – according to its filings – appeared to have enough liquidity to weather this crisis.

But now it seems that SunEdison’s management may have in fact been misleading investors about its liquidity. The Wall Street Journal reports that the SEC is investigating whether SUNE’s reported $1.4 billion in cash was actually much smaller than that, potentially as small as $56 million.

This, if true, is dangerously misleading, if not outright criminal.

But even more than anger, I feel disappointment. SunEdison assembled some of the best solar power assets in the world, becoming the world’s largest solar power developer. The company was perfectly positioned to profit off the explosive growth of solar power – estimated to reach 80% in the U.S. in 2016 alone.

If the SEC is correct, and SUNE executives did indeed mislead investors (including us), then they managed to waste all of this wonderful potential, and – worse – shareholders’ money.

And even if that turns out not to be true down the line, the markets will still react as if it is. The only thing that’s certain now is that this will play out in the courts, potentially for years. And I don’t believe it will be worth riding the inevitable ups and downs.

Sadly, it’s time to let this go.

If you followed along on this trade, the prudent thing to do now is to leave and retrieve your remaining capital. The risk is just too high now, and this latest news suggests that SUNE’s management has no clear way out of this.

As much as I would like to see the potential of this company bear fruit, with this morning’s news, there’s just no sound case for hanging on. When there is this much speculation and rumors surrounding a company and its management, the full damage is difficult to measure.

That means it could get worse from here. And I don’t say that lightly: this is the most disappointing situation I’ve ever witnessed.

I’ll continue to follow SunEdison even though it will no longer be in the Energy Advantage Portfolio, and I promise to let you know of any developments.

This is such a shame, given the months of research and resources we’ve devoted to our coverage of SUNE. And – worst of all – the extraordinary trust that shareholders placed with management.

There’s more to follow on this story.

In the meantime, here’s what we suggest:

Action to Take: Sell SunEdison Inc. (SUNE) at market.

Sincerely,

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backoffice
4 years ago
Reply to  robert easton

Thank you Travis for putting Moor’s into perspective,

👍 380
Tait
4 years ago
Reply to  robert easton

SUNE now SUNEQ is in Chap 11. I bought it. Lost a lot on it.
Not sure about the new ticker stock being hyped, I bought SUNE back in FEB when first hyped.

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Mike
Mike
4 years ago

Got the sell email from Kent Moor Monday. He stated the Sun had overstated their cash at 1.5 billion when it actually was around 60 million. Glad i didnt buy on his recommendation, but I did pay the 79 bucks to get in his club. What a racket as they hammer you with constant emails to join their other areas. When it is all said and done the total cost is around 7k to get all the “TIPS”. One good thing it is how I found stockgumshoe as I was so tired of being barraged with emails I searched and found you!

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tchanches
tchanches
4 years ago
Reply to  Mike

You’re right on Mike. I bought, sold and lost quite a bit on SUNE. Being fed up with their overabundance of mysterious emails I canceled my subscription this morning and luckily got total refund of my 79 dollars. At least I haven’t lost everything….I will use that money to upgrade my stock gumshoe membership at least I’ll have my money worth…

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modernrock
4 years ago

Great work!

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hkornfield
hkornfield
4 years ago

Moors first rec. SUNE in his expensive newsletter, about 4 months prior to the November rec. you cite. I was already down ~30% but stayed in when he again recmmended it. I bailed last month. His substitute now has no value, especially with the word-for-word lazy publication. I have concluded that “Dr.” (PhD in Political Science) Moors is not a worthwhile resource for any commodity or financial stock. Or anything else. Best regards, and thank you. HJK

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tchanches
tchanches
4 years ago
Reply to  hkornfield

Wow…! PhD in Political Science…that explains a lot…! 300% in line with your conclusion.

Ed
Ed
4 years ago
Reply to  tchanches

When I see Moor’s name on a teaser, I seek the unsubscribe link.

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takeprofits
3 years ago
Reply to  tchanches

In other words the PHD stands for “Piled Higher @ Deeper

Andy Hoffarth
Andy Hoffarth
4 years ago

Just a quick note to confirm Dr. Kent Moors has advised people to SELL, SELL, SELL SunEdison. Apparently he didn’t know as much about the company as he thought. I find that difficult to believe from a person that advises world governments and corporations on energy policy. On a side note. it is my personal recommendation that anybody buying