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Evergreen Solar (ESLR) - can it be next First Solar (FSLR)

I recommended Evergreen Solar (ESLR) on May 18 in my post with target price of $14 - that was pretty timely call since 3 days later ESLR announced contracts worth of $1B and stock jumped by 20%. Hope some of you made some money on my call:-)

So should one take profits from this 20% jump or hold and wait for another run. Let's do some analysis.

Evergreen Solar has an enterprise value of $1.3 B with forecast revenue of $120 M in 2008 and $400 M in 2009. With new contracts of about $1B on top of already existing backlog of $850M, it has confirmed orders up to 2013.

In comparison, First Solar (FSLR), Suntech Power (STP) have EV/Sales of about 10 or more. If we apply same EV/Sales for 2009, ESLR would be worth about $3B giving it target price about $20 or more. So if you want to get additional 80-100% return on ESLR, hold onto your position and do not sell just because you got 20% in less than 4 days. Most of the other solar stocks like CSIQ, SOLF, SPWR returned 80-100% in last few weeks and I think it's now ESLR's turn.

Solar Bargains

On another note, congress just passed tax credits for renewable energy
and most likely senate is going to pass it during summer. So sunny days are here again for solar stocks. However these stocks would be quite volatile so you may want to take positions when these stocks come down a little bit.

If you would rather prefer funds/ETFs in this sector, check this WSJ article

Alternate energy - tempting but volatile

Have a good weekend

/Shyam

Disclaimer: I do have small position in solar stocks including ESLR

Comments

Anonymous said…
has been dead in the water since the sold of 20% of the company to DC chem last year for silicon contracts.
If you're going solar, stay out of eslr and stay out of China.
11:15 PM
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