Evergreen Solar (ESLR – Nasdaq)
Dear Bottarelli Research Member,
If you’re like me, then the market volatility we’ve seen this week was enough to make your knees buckle! As you know, the roller coaster markets have been moving up and down 300 points in the blink of an eye, and because of this tremendous volatility, Bryan and I would like to protect our current small-cap positions by adding a December put contract on the DJX (which is an asset that represents 1/100th the value of the Dow Jones Industrial Average).
By adding this put position to our ledger, we can inoculate ourselves against any forthcoming market sell-offs. You see, these puts gain value as the Dow falls. As a result, you’ll be profiting off any downside market pressure. In doing so, you can effectively minimize any short-term losses sustained on your small-cap positions, thus offering you the ability to make money in both upside and downside markets. So for today, our first order of business is to buy the DJX December 130 Puts (DJW XZ). Currently trading between $2.80 and $3.00 per contract, these puts give you the right (but not the obligation) to sell 1/100th the value of the Dow for 130 anytime before the third week of December. As for a quick profit calculation, if the Dow re-tests its August low of 12,500, these puts could move from $3.00 all the way up to $6.80, good for a 126% gainer. In my view, that type of protection is well worth the price, so let’s add this play now!
DOWNSIDE PROTECTIVE PLAY: At the open of Monday’s trading, buy the DJX December 130 Puts (DJW XZ) at market, good for the day.
TACTICAL NOTE: Due to the weekly nature of our small-cap alerts, the intra-day management of this play will be up to you. But as a general rule, Bryan and I want you to take half of your profits off the table at the 25% level. Then, if you see a 50% profit on the remainder of this position, take the other half of your profits.That’s how we recommend managing this protective put position, but be sure to mange it accordingly throughout the week.
Now on to this week’s newest small-cap pick…
As you’ll see, what I have for you is another “Tiger by the Tail” stock. In other words, I think this company is being overlooked by Wall Street, and getting positioned now will give us a tremendous advantage over the rest of the investing population.
This company is in the solar manufacturing industry, and let me tell you, they are making waves around the globe. Their patented crystalline silicon technology, known as String Ribbon, uses significantly less silicon than conventional approaches — putting them in a tremendous position to capitalize on the raging bull market in solar energy. And folks, when I say “raging bull market in solar energy,” boy do I mean it.
I’m sure you’ve seen the returns we’ve already made on JA Solar Holdings (JASO – NASDAQ), which is up over 200% from our June 11th entry point. And I’m sure you’ve also seen the recent performance of First Solar (FSLR – NASDAQ), which jumped over $50.00 in one day after reporting blockbuster earnings. Without question, those are incredible returns. But to tell you the truth, I didn’t fully recognize the global demand for solar technology until last week. Here’s what happened:
As I’ve mentioned before, I’m a semi-retired partner in a building business, and last week we launched our newest housing project. During these launches, my partners and I host an open-house party where we invite a number of potential buyers to come out and see our new project. During this particular open house, I was absolutely shocked to witness the incredible consumer demand for solar energy. I kid you not, I had countless people asking me about solar roofing, fast-recovery water heaters, and solar windows. In fact, this unbelievable customer demand has literally forced me to install solar roofing in our newest spec home. Make no mistake about it: The push for solar is on. And today, we’re going to ride this wave with one of the lowest-cost solar producers in the world.
Right now, this $14.00 company is fast-tracking the construction schedule of their new $165 million solar plant in Devens, Massachusetts. They expect this plant to be operational by the summer of 2008, and at full capacity by the end of 2008. The launch date of this new plant could spark upside activity in this rapidly-growing company all year long. Not only that, but this company also just teamed up with joint venture partners who are working behind the scenes to bring forth a new IPO dedicated solely to their EverQ integrated wafer cell business. If this IPO goes public, you can bet that the parent company will retain a large amount of the IPO proceeds, further strengthening this company’s stock valuation.
When you combine the exploding global solar demand, this company’s new $165 million production plant, their low cost production technology, and their potential IPO spin off, and it’s clear that we have the potential for a tremendous winner on our hands. So let’s get positioned now. The company is called Evergreen Solar (ESLR – NASDAQ), and let’s buy shares anywhere under $14.00. I firmly believe this stock is setting the stage to take off, so let’s be sure that we’re along for the ride!
UPDATES
Big Cat Energy Corporation (BCTE.OB): Finally!The Wyoming Department of Environmental Quality has approved seven permit applications submitted on behalf of Marathon Oil Company to evaluate the ARID process in the Wyoming Powder River Basin. This is huge news, and it explains why BCTE jumped over 20% last week. Both Big Cat Energy Corporation and Marathon Oil have high expectations for these wells, so I’m urging everyone to stick with this one. I admit, getting these permits has taken a lot longer than I expected, but now that the wheels are in motion, let’s sit back and let BCTE move upwards. The best is yet to come!
Melco PBL Entertainment (MPEL – NASDAQ): We have already taken 50% off the table on MPEL, so I’m officially tightening the leash on the remaining half of our holdings. Should the time come to close out the remaining half of our position, you’ll be the first to know.
Basin Water (BWTR – NASDAQ): They just announced earnings that disappointed Wall Street, which explains why the stock has been under pressure lately.But I’m using this dip as an entry point. Why? Because they just announced an exclusive alliance with Rohm and Haas (ROH – NYSE) that’ll focus on developing new technologies to address groundwater treatment and emerging water recovery applications. This alliance could really help a growing company like BWTR, and since I truly believe that water will be the next oil, I’m buying this dip. I urge you to do the same.
JA Solar Holdings (JASO – NASDAQ): For those of you that are still holding JASO, this is for you. Over the next two weeks, I expect the stock to establish another strong bottom, and this could spark another upside run leading into the end of the year. With such incredible profits in hand, it’s coming time that we lock in our gains once and for all. Let’s close out the rest of your profits anywhere over $60.00 per share and officially book JASO as one of our best winners of 2007.
Cereplast (CERP.OB) & Lighting Science Group (LSGP.OB): Each of these stocks have enormous upside potential, but neither of them are moving the way I had thought. Therefore, I’m putting each of them on a short leash. Although nothing fundamental has changed (in terms of the reason we bought each of these plays), I want you to refrain from adding any new shares to your position. Unless I see some strong upside advances, we’ll most likely close out these positions out before flipping the calendar over to 2008.
Echelon Corporation (ELON – NASDAQ): Everything about this company is extraordinary. ELON’s technology reduces the amount of energy being used around the world, and they’re adding new clients week after week. They also reported great earnings and fantastic forward guidance, which makes their recent down-move perplexing. In our weekly talks, Bryan and I have both agreed that we are being given a gift here, so I would take advantage of this phenomenal price on the stock and add to your position.
SCHEDULING NOTE: On a personal note, next week is Thanksgiving, so there will be no small-cap alert posted next Friday. I know many of you will be traveling, so we’ll pick things up again on November 30th. Be safe, enjoy your time with family and friends, and we’ll talk again soon. Until then, here is Bryan with the rundown on ESLR.
Sincerely,
According to The United Nations’ World Energy Assessment, Solar Power Plants Covering JUST ONE PERCENT of the World’s Deserts Could Meet the Entire Planet’s Current Energy Demands
99.9% of the world’s available renewable energy comes from wind and wave power, hydroelectricity, biomass, and the sun. Of this entire group of renewable energy sources, the one market segment that’s handing investors incredible returns is solar power.
As I’m sure you know, solar power specifically refers to the conversion of sunlight into electricity. Solar panels can supply a substantial proportion of the electricity needs of a typical household (including water and space heating, ventilation, industrial processing, cooking, water distillation, and disinfection). Although solar panels work best in direct sunlight, they also work well on cloudy days. They have no moving parts, require little maintenance, and are designed to last many years.
With these types of benefits, you often times see solar panels mounted on a roof or connected to the local electric utility. And aside from substantially reducing your electric bill, many consumers are discovering the wonderful advantage of selling any surplus electricity directly back to the utility companies for an even more attractive rate!
This is a very attractive selling point for solar consumers today, but interestingly enough, solar energy has been around for quite some time. In fact, solar energy dates back to early Greeks, Native Americans, and Chinese, who all warmed their buildings by orienting them toward the sun. Today’s modern solar technologies provide an alternative energy solution for the Big Three: Heating, Lighting, and Electricity. When you review the statistics below, it’s easy to see the appeal of implementing this technology. Consider this:
- 22% of the total energy used in the United States is for lighting.
- 14% of the total energy used in the United States is for water heating.
- 40% of the total energy used in the United States is for HVAC systems.
Add it up, and 76% of the total energy used in the United States could be replaced using solar technology. No wonder the production of solar cells is increasing at an unprecedented rate!
Between 2000 and 2004, for example, worldwide solar energy capacity increased an annualized 60%. And since there’s only a small amount of solar cell companies in the worldwide market, this is wonderful news for that small percentage of them that have cornered this market niche.
Now this is important: In late 2004, the supply of solar panels was overtaken by the demand for solar panels, and as a result, shortages of refined silicon (which are used to make solar panels) began slowing down global production and pushing up prices. These supply problems continued throughout 2006 and 2007, making any company who owns this highly-coveted solar ingredient very valuable. And that’s where ESLR comes into play.
Founded in 1994 and headquartered in Marlboro, Massachusetts, Evergreen Solar engages in the development, manufacturing, and marketing of solar power products primarily in Europe and the United States. Below is a photo taken inside ESLR’s solar plant.
Using their proprietary “String Ribbon” technology, ESLR can manufacture crystalline silicon wafers (which are the primary components of photovoltaic solar cells) using 50% less material than the industry average. By dramatically reducing their silicon consumption, ESLR can meet the global solar panel demand without suffering though silicon shortages.
How does String Ribbon work? Let me explain…
Conventional silicon wafer technology is based on energy-intensive casting and oil-based machining and cutting of large silicon blocks. (As a side note, this energy-intensive process hardly applies the spirit of “clean energy” that solar panels are designed to solve!) String Ribbon, on the other hand, originates from the science of “surface tension.”
According to ESLR’s description, the making of a String Ribbon wafer is just like the making of a soap bubble: The surface tension between the soapy bubble solution and the wand creates the bubble. But instead of a bubble “ring,” ESLR’s proprietary technique uses two parallel wires between which a thin film of silicon is formed. Then, two heat-resistant wires are pulled vertically through a silicon melt, and the molten silicon solidifies between the strings. The entire process is continuous, silent, and clean, and the end result is a long ribbon of silicon which is harvested and cut into smaller pieces — which are then processed into solar cells. Perhaps it sounds like a large process, but amazingly, this all happens in state-of-the-art furnaces that aren’t any bigger than a typical table-top. ESLR’s Gemini II furnaces (pictured below) grow two ribbons at a time, and they’re currently working on a second generation furnace that’ll grow four ribbons at the same time.
Once ESLR’s solar products are created, they use the strategic partnerships they’ve developed with Q-Cells and Renewable Energy Corporation to sell them in three primary market sectors: Wireless Power, Rural Electrification, and Grid-Connected Applications.
And looking forward to 2008, the future certainly looks bright. In fact, throughout the 2007 calendar year, ESLR achieved many significant milestones including:
- Signing a 3 multi-year polysilicon supply agreement.
- Raising over $170 million in equity.
- Began the construction of their 75 MW Evergreen facility.
- Increased their long-term supply contracts to over $1 billion.
- And announced plans for a spin-off IPO.
When you combine these milestones with ESLR’s ability to produce solar panels using 50% less silicon then their competitors, it’s no surprise that the stock has just hit a series of new 52-week highs on November 6th, 7th, and 8th.
Since hitting these highs, ESLR has tailed off a little, offering you a fantastic buying opportunity anywhere under $14.00 per share. Let’s take advantage of this powerful solar play and ride the incredible solar market tailwinds by adding ESLR to our small-cap portfolio now!
PLAY: Buy shares of Evergreen Solar (ESLR – NASDAQ) at or under $14.00, good for the week.
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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