Going Green with SunPower (SPWR)
With energy prices soaring, global warming and the focus on “going green”, the demand for alternative forms of energy will continue to grow. One of the more promising alternatives is solar energy. While prices of solar panels are still expensive at present, this soon will change. New technologies from cutting edge companies such as SunPower (SPWR) and SunTech (STP) could soon change the way we get our electricity. As prices of solar panels become more affordable, the day when every home can generate enough electricity to sustain itself is very near.
Imagine the day when every building is able to generate enough electricity to power itself. Not only will the prices of electricity drop, the energy will be clean. Solar energy is no longer a dream; it is available today and will continue to grow in demand. The growing interest in cleaner energy has states like California providing incentives to help homeowners that wish to install solar panels. In some states, the subsidy is about 15% of the total cost. We believed there will be more government subsidy in the face of soaring oil prices.
One company we would like to encourage everyone to keep their eyes on is SunPower (SPWR). This company designs, manufactures and markets high-performance solar electric technology worldwide. The company targets homeowners, homebuilders and the commercial space. Within the industry, their solar panels are known for its efficiency. The company competes with SunTech, BP solar and a host of other companies within the space. Despite the strong competitive environment, we believed this sector has huge potential. SPWR has been around for over 20 years, was part of Cypress Semiconductor, but recently split into an independent company. The company went public in 2005.
SPWR is currently profitable. In looking through its annual and quarter income statements, this company appears to have a sustainable business model with recurring revenue. In our opinion, the revenue qualifies as a “quality earning”. There is no window dressing going on, just solid growth as demand for the company’s products continues to grow.
In 2005, the company had a net loss of approximately $15 million. However, just a year later, (2006), SunPower was able to post a net profit of $26 million. Trading near its 52 week high of $48.75, we are reluctant to enter at this time, but will continue to look for opportunities to acquire shares of SPWR during weak session or market corrections. The company is expect to report later this month, we believed due to the high demand, SPWR should have no problem meeting its number. In fact, we are incline to believe the company will likely report a better than expected top and bottom line.
To learn more about SunPower (SPWR), we encourage everyone to read to their annual report. Here is great story about SunPower from sfgate.com.
Update: 4-26-07: In the last two weeks, SPWR has gone up 10 points, now trading at $59 per share. While this is great news for the investors, one might consider taking some profit at this level. The P/E is out of whack in comparison to its competitors such as SunTech. Given the stock has been rising so fast, we are now wondering how much more can this stock really go.
Comments
Hey guys! Where do you see a new entry point for SPWR? Thanks
Posted by: Stock Detective | May 16, 2007 09:37 AM
SPWR seems to be powering away given the recent focus on alternative energy. Now trading in the high $50 range.
We initially thought it was expensive at $45 per share, but looking back, it was quite inexpensive.
While the stock has the potential to go higher, we are reluctant to enter at this point. In fact, there is not much stock out there at the moment that we believed is a value anymore.
To answer your question, our entry point for SPWR would be in the mid $40 per share. We'll just have to wait since this market continues to rally.
Good Luck, Stock Detective and thanks for stopping by.
Posted by: ibooyah | May 16, 2007 06:55 PM