Solar IPO...Take 2

Written by Brian Hicks
Posted December 9, 2005

China-based Suntech Power Holdings has announced that it will be offering 26.38 million American Depositary Shares at $11 to $13 under the proposed NYSE symbol, STP. This deal is expected to be priced next week.

Now you may remember last month, when SunPower Corp. (SPWR:Nasdaq) rose more than 40% when its IPO hit…and traditional 'non-believers' of solar began to turn the corner.

Though even now, with Suntech money lining up outside the New York Stock Exchange, the skeptics are back at it - quick to point out how subsidies are really what's helping the solar industry grow at such a record pace.

Fair enough.

But they're still missing the point.

Renewable energy subsidies were not developed to pump up the market, only to be deflated when the subsidies end. They were developed to kick start the market into high gear - as even the greediest oil-slicked politician knows that the petrol ride will come to an end…sooner than later.

Over the last few years, as energy demands (and prices) have increased, renewables have been strategically building momentum. And an influx of tax credits and investor dollars have certainly allowed for this to happen. Just look at the photovoltaic industry - which has averaged a 40% annual growth rate since 2001. And production levels…just since 2003 have doubled - representing roughly $11 billion in revenue.

I assure you, my friend - this trend will continue.

Over the next two years the solar industry will become stronger than ever - positioning itself to be an efficient, cost-effective energy option.

And while the skeptics line up their soapboxes - most of which are shipped in pork barrels, the big institutions are now willing to back these solar stocks. And so am I.

However - don't be fooled by the hype either.

Every savvy energy investor knows there's money to be made in solar. But those who don't fully understand where the real profits are may be quick to go after only those new public companies - which are often placed on holographic pedestals.

Don't get me wrong - I'm not saying these companies aren't going to be successful. In fact, I wouldn't be surprised to see investors make a few bucks off these IPOs over the next couple of years.

But if you're going after that solar payoff - you can't solely focus on the here and now. You must accurately predict the evolution of the industry.

For example, last year I told Green Chip members that a silicon shortage was coming - and it could have a devastating affect on photovoltaic manufacturers. Knowing it was only a matter of time before every energy investor found out about the silicon shortage, I geared Green Chip investors towards a company that had not only secured enough silicon to get it through the shortage…but actually used less silicon in its manufacturing process.

That company is called Evergreen Solar (ESLR:Nasdaq). And a couple of months ago, when the silicon shortage started making headlines…green chip investors watched the company's stock shoot up another 40%.

And now…while all the 'johnny-come-latelys' latch on to anything with the word 'solar' attached, I'm predicting the next solar payoff to come from Building-Integrated-Photovolatics (BIPV).

Mark my words - BIPV is the solar sector that will offer the most bang for your buck in 2006.

In fact, one of my BIPV picks has already shot up more than 47% since I recommended it. And I expect it to be up at least another 35% by the end of January.

You can read more about BIPV and this company here.

Remember - with any new technology…there will always be skeptics. But in the case of solar - as these past two years have proven - there will also be profits.

Which do you prefer?

Until Next Time,

Jeff Siegel