“SB-1 Energy Dividend: Play the Solar Bull Market”

By Travis Johnson, Stock Gumshoe, April 29, 2008

This is a sleuthing job that I first posted about six months ago, but it appears to be making a comeback. I’ve gotten dozens of emails about this one, so I thought I’d put it out there for all the new(ish) readers. The price of this stock spiked dramatically at the end of last year, right when seemingly all the solar stocks went nuts, but has since come down by 50% or so from the highs and is trading quite near where it was when the teaser first started circulating.

Now, with the teaser circulating again and all of the solar stocks getting hurt by Suntech Power’s miss, is this one you want to check out? It’s probably not where I’d go for a solar investment, but I’m sure we’d like to hear your thoughts, too.

Here’s the original writeup — I haven’t updated anything:

“All across America, homeowners and businesses alike are slashing their energy costs by switching to a power system and running their meters backwards.”

That’s the promise of this teaser stock, from Green Chip Stocks — it’s supposed to be the best publicly traded way to benefit from the SB-1 law in California (and similar laws in other states).

What is this law, you say? I’m glad you asked. It’s the one that requires utilities to purchase power for the grid from their customers — so, if you decide to install a solar panel on your roof, and it produces more power than you use in any given hour, your eletricity meter will run backwards and the utility will have to pay you for your surplus electricity. This is a fairly common way, along with direct subsidies and tax breaks, of subsidizing solar power.

And in California, apparently, they’ve gone a bit further (as they are wont to do), adding a requirement that new homes built after 2011 include a standard option of installed solar panels. Perhaps they’ll even have worked off the unsold inventory of speculative homes in the state by then.

The colorful teaser language about the utility companies gnashing their teeth and going broke is, perhaps, a bit of an overstatement — most of California, especially Southern California, is desperate for new power supplies but unable, due to strict local regulation, to add more natural gas power plants (or, God forbid, coal). So really, the utilities probably breathe a sigh of relief that here’s one bit of power they don’t have to buy on the wholesale spot market at usurious rates. That’s just my conjecture, I’m no expert on the wholesale power market, unfortunately.

We hear and see teasers and touts for solar companies all the time — mostly solar panel manufacturers like Suntech or Sunpower, but also polysilicon suppliers like LDK and MEMC Electronics, and specialty names like World Water and Power. The list is extremely long, particularly among Chinese manufacturers who are all trying to ride on Suntech Power’s coattails.

But this teaser is a little different — it’s for an installation company, what Jeff Siegel at Green Chip Stocks calls the only publicly traded solar power installation company.

Is that true? Hard to say, what with all the different companies that provide this service as at least part of their business, and the large number of publicly traded but unlisted companies trying to get investors’ attention. But we’ll take him at his word for now.

So what clues do we get for this one, aside from the fact that they’re a publicly traded installer of solar power systems?

Got a Nasdaq listing on September 24.

Under $10 a