Tuesday, March 18, 2008

Time To Revisit Evergreen Solar

Over the past couple years it has been quite easy to see the correlation between solar stock prices and oil prices, but lately with the markets have been self destructing, and no one has been ready to take on any "speculative" solar plays like Evergreen Solar (ESLR). This is a stock that was just trading at $18.85 just three months ago! Today even with the Dow surging 420 points Evergreen Solar is sitting at $8.23 while oil is well over $100 per barrel.

So why did the stock plummet like that in just three months is the question you need to ask yourself. Well, first of all the market in general has been horrible, the number of companies hitting 52 week lows has been downright astonishing. That of course is not the whole story though, Evergreen Solar just finish a offering of stock at $9.50 per share. Evergreen Solar expects to use the net proceeds from the offering, together with funds it expects to raise by way of future debt financing and its operating activities, (i) to complete phase I of its new manufacturing facility in Devens, Massachusetts, (ii) to plan, construct and equip phase II of the Devens manufacturing facility and (iii) for general corporate purposes, including purchases or prepayments for raw materials, including polysilicon, and working capital. This offering further dilutes shares and investors can tend to see this as a negative, especially in the type of environment.

None the less, the future of this company is still looking quite bright from my point of view. Just this past year they announced several polysilicon supply agreements which will provide a generous supply of the material needed to make solar panels for the next 10 years. They have ramped up production on their Devens plant and expect to start shipping solar panels out of that location in mid-2008. Not too mention Evergreen Solar touts the most green solar panels on the market, which simply means they have the smallest carbon footprint of any panels on the market. With oil over $100 a barrel I am shocked to see ESLR trading so low, and I have been taking advantage by added to my long term position at these levels. The long term bull market in solar power and other alternative energies is here to stay and Evergreen Solar is a great way to play it.

What can I say though it was hard to single out ESLR with so many stocks having been tossed in the garbage as the markets crashed. I still like Google, CECO Environmental Corp, Zoltek, Vasco Data Securities, Royal Bank Of Canada, and YUM Brands all at these levels. As a younger investor this downturn in the market has been like a God send. What an opportunity to get into great companies at bargain basement prices.

Better hurry though these sales aren't going to last long I am afraid...

As a side note our pole here at Stock Picky has closed and the major of voters say that 2008 will be a bear market. So far the bears do have the upper hand, but I think that by years end we will see the market averages hit new highs.

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