Investing in Solar Stocks: What You Need to Know to Make Money in the Global Renewable Energy Market

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Investing in Solar Stocks: What You Need to Know to Make Money in the Global Renewable Energy Market

Investing in Solar Stocks: What You Need to Know to Make Money in the Global Renewable Energy Market

Authors: Joseph Berwind

Published: July 2009

eISBN: 9780071608961 0071608966 | ISBN: 9780071608954

Contents

Acknowledgments

Introduction

From Cell to Solar Photovoltaic Energy

An Investment Opportunity

About This Book

Chapter 1 Solar Technologies: The Science behind the Stocks

Solar Technologies: Silicon vs. Thin Film

Manufacturing Process for Silicon-Based Solar

Cell Manufacturing

Using Production Methods to Pick Stocks

Research and Development Outlook

Chapter 2 Monitoring the Industry

Solar: A Global Market

Net Metering and Feed-in Tariffs

A Survey of Incentive Programs around the World

Interpreting News of Incentive Program Changes

Renewable Portfolio Standards

U.S. Investment Tax Credit and the Implications or the American Reinvestment and Recovery Act

Chapter 3 Comparative Business Models: PV Economics and Emerging Markets

The Solar System at a Glance

Vertical Integration in the Solar PV Industry

Position in Supply Chain and Extent of Vertical Integration

Industry Analysis of the Solar Supply Chain

Solarfun and Suntech Power: Comparison of Integration Strategies

Strategic Partnerships in the PV Industry

Long-Term Contracts for Solar Modules and Capacity Expansions

The Economics of Solar PV

Financing Solar PV Projects in the United States

Emerging Business Models

Chapter 4 Solar Stock Valuation

Ratio-Based Analysis

Valuation with M&A Deals as Reference

Discounted Cash Flow Valuation

Earnings Drivers

ROIC/ROER Valuation

Investment Prospects for Solar PV Stocks

Chapter 5 Volatility and Risk

Capacity Expansions and Production Growth

Raw Material Supply Contracts

Revenue Visibility

News on Government Policies

News on Ethics/Corporate Governance Issues

A Reputable Investor Increasing Stake/Insider Ownership

Approaching Prepayment Deadlines

Volatility Analysis and Classification of Catalysts: Examples

Measuring Volatility

Put-to-Call Open Interest Ratio

The Economics of Fabrication Expansion

The Future of Fab Equipment Spending

Chapter 6 Pulling the Trigger

Risk-Reward Calculus for Solar PV Stocks

Correlation and Beta of Solar PV Stocks with Oil and Natural Gas Indices

Coefficient of Variation of Solar Stocks and Standard Deviation of the Indices

Differentiation for the Long-Term Investor

Trigger for the Long-Term Investor

First Solar from a Long-Term Perspective

Suntech Power from a Long-Term Perspective

Knowing When to Take Action

To Buy, Sell, or Short

Chapter 7 Investing for the Long Run

Identifying Risks

Research and Development

Geographic Diversification

Supply Visibility

Supplier Concentration

Demand Visibility

Customer Concentration

Track Record in Achieving Scale

Management Quality and Corporate Governance

Evergreen Solar—the Long-Term View

Company Examples for a Better Understanding

Investing on the Basis of Revenue and Earnings Growth

Strategic Risks

Macrolevel Risks

Operational Risks

Product-Related Risks

Cost Reduction in the Industry

Exchange Rate Impact

Chapter 8 Rebalancing a Solar Portfolio

Reasons for Rebalancing a Solar Portfolio

Ratio-Based Analysis

Company Illustrations

Differentiated Companies in the Solar PV Sector

Principles for Managing a Solar Portfolio

Chapter 9 The Solar Storm

The Storm Becomes Tropical: Subsidies Cut

Hurricanes, Tornadoes, and the Credit Crisis

October 2008: The Eye Passes Overhead

Creative Destruction

U.S. Utility Market

Emergence of Solar Master Limited Partnerships

After the Storm: Solar PV Business Models of the Future

Index