Solar stocks have had a sideways year and since the move in 2007 the industry has range traded. When I speak to portfolio managers across market caps about Solar Stocks they all say that they are afraid NOT to be long a pedigree name and some smaller solar companies who have upside. Essentially, managers who choose to be in cash versus investing in a growth area are subject to scrutiny.
This creates sector phantom shorts where the entire group carries a premium in the multiple and if you have to chase them near quarter end you can end up chasing the stock like the short side players do when they are looking to cover. This Phantom Short mentality lies within every manager who knows he should be long sectors which will have unprecedented growth. Solar stocks are a revenue growth explosion waiting to happen and many times the market consolidates before it makes a leg higher pulling all market caps with it. Having said this I have started looking for Solar stocks who have changed business models to adapt to the current environment. Solar Thin Films is one of these stocks.
The company recently announced that it has signed an agreement to acquire 100% of 2COR9, LLC, a California company which will develop and install solar power plants for industrial, commercial, and government customers. The types of facilities which the company's personnel have sold while at predecessor firms include agricultural centers, corporate offices, distribution centers, manufacturing facilities and retail facilities. The company's host customers generally have sizable facilities so they can utilize extensive unused roof space.
The U.S. has become the fastest growing solar market in the world and poses a great opportunity for Solar Thin Films. Vast utility scale solar power projects are fueling a sharp increase in the U.S. Solar Market overall. The U.S. solar electric capacity, including both photovoltaic and concentrating solar power installations, increased 37% in 2009. Photovoltaic installations (grid-tied) grew by 38%.
Solar has been a very visible component of California's overall renewable initiative. The state created the California Solar Initiative to target subsidies for residential sized systems in addition to other programs aimed at large-scale commercial utility sized installations. In the past few years, many states, following California's lead, have passed laws promoting large scale adoption of solar power. California will still remain the largest player in the PV market, but other states will be close behind. 2COR9 LLC, along with Solar Thin Films, Inc., are in the perfect spot to exploit this opportunity.
As was stated in a recently filed 8K, the company decided to shift focus from turnkey factory sales in foreign markets through the Hungarian manufacturing business to concentrate on establishing and managing solar farms throughout the United States, Israel, Canada and other places with government support programs for solar power generation.
The acquisition should be completed within the next week or 10 days.
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