UPDATED: Visit ourhttp://www.energyandcapital.com/resources/solar-energy-investments resource page for updated information on investing in the solar sector.
If I asked you to name a solar stock, you’d probably say First Solar (NASDAQ: FSLR) or SunPower (NASDAQ: SPWRA), if you could name one at all.
Those are, after all, the two largest pure play U.S. solar companies.
If you were witty, you’d say GE (NYSE: GE) or Sharp (PK: SHCAY) or Sanyo or BP (NYSE: BP), and you’d still be right… though those certainly aren’t pure plays.
Even though GE expects $3 billion in solar revenue per year by 2015, it will still be a small portion of its $40 billion per year energy unit. Same with Sharp and BP.
They make and sell a lot of solar panels because it’s profitable for them, and they know future growth is going to be huge.
But if you want to profit from solar alone, you’ll need to take a different approach…
With that in mind, here are three solar companies with monster potential you likely haven’t heard of.
The Supplier
Solar panels may soon be a commodity. That will be great for suppliers of systems who make solar panels, but it will be terrible for actual panel makers as lower margins put the squeeze on profitability.
The play you’ve never heard of here is Amtech Systems (NASDAQ: ASYS), maker of the furnaces, cell transfer systems, and vapor deposition products necessary to produce today’s solar panels.
In other words, Amtech is the solar panel suppliers’ supplier.
It has a P/E ratio less than five and it’s doubled revenues in the last year.
Amtech also has gross margins in excess of 35% — much higher than any solar panel producer.
And the best part is they win no matter which solar company wins: GE, First Solar, Sharp — it doesn’t matter… They all need solar panel production equipment.
The Installer
Similarly, installers don’t care much about which panel producers are successful, either.
They make their money by contracting with home and business owners to evaluate potential sites and install solar systems. In many cases, they also make a mint by taking a percentage of the tax breaks afforded the owner of the system.
And Westinghouse Solar (Yes, that Westinghouse!) (NASDAQ: WEST) is on the verge of becoming a key national player in that market.
Westinghouse says by “building upon our legacy of dependability, we are making residential solar power — like the sun itself — accessible to everyone.”
It has a patented solar installation process that reduces parts by 80% and labor costs by 50%. And it’s also selling installation systems through Lowe’s and building a nationwide dealer network. You can even open one yourself. Think: McDonalds of the solar industry.
The Disruptor
Until now, “going solar” meant putting some type of panel on your roof or installing a series of giant mirrors in the desert…
That’s what I meant by the commodity comment above. All these U.S., Chinese, and European companies are essentially making the same product. When a company comes along that breaks the mold, it’s going to make an absolute fortune.
The third solar company you’ve never heard of could very well be that company.
It makes a solar window that can generate electricity. No need for panels. No need for post-construction installation…
These windows will simply be used in new construction — turning every new home and commercial building into a power plant.
CNBC calls it a silver bullet. I call it money in the bank.
Learn more about the opportunity this breakthrough presents before catching up on the rest of this week’s investment ideas below.
Call it like you see it,
Nick Hodge
Editor, Energy and Capital
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