If you asked me the number one solar company to throw your money into, it would most definitely be YGE. Their numbers are great:
- Mkt. Cap of only 2B - tons and tons of room to grow in the energy sector!
- Operating Margin of just under 20%
- ROE is 13.6%, solid for companies in Solar Energy.
Obviously the major concern is their free cashflow. Things have been tight lately due to the high cost of silicon for manufacturing. But the technical and fundamental side of silicon itself says it's time for a bear run (Another position I'm interested to take up), so that will result in a higher level of free capital and profit for YGE.
But the biggest reason I like them right now is the fact they are building a solar power plant in China, embedding themselves in the infrastructure and positioning themselves for decades of solid cashflow. Even better, the net asset value of ownership will actually increase over time and add some padding to a potential buyout in the next few years. I am taking a long position in YGE for a 1+ year hold as I see great potential for a 75% - 100% price gain and also the possibility of a buyout once the market has repositioned itself and capital infusion levels are back to previous levels.
$17.93 (08/30/08)
