Evergreen Solar (ESLR): The Matrix Reloaded
Over a year ago, on October 26th 2006, former Stockmaster Phil McCallister wrote an article entitled: Will Evergreen Solar (ESLR) ever recover?
This was back when the stock was trading at $8.73. Since then, a lot of things have happened. Let’s take a trip through the Matrix of Evergreen Solar (NASDAQ:ESLR) and see if the stock has recovered, and if the stock still has room to grow.
Last Friday, Evergreen Solar stock rose $1.47, or 15.9 percent, to $10.70. Its shares have traded in a range of $6.97 to $13.21 over the past 52 weeks.
The solar-products company narrowed its loss in the third quarter on cost-control initiatives and said it expects to narrow its loss again in the fourth quarter on continued improvements. Profits from EverQ, Evergreen's joint venture with Renewable Energy Corp. and Q-Cells AG, helped boost results as well.
Evergreen Solar is officially a stock to start looking at seriously. The company is the underdog of solar the solar industry compared to First Solar (FSLR) and Sunpower (SPWR). Just look at these charts!
FSLR 1 year Chart
SPWR 1 year Chart
Then there’s ESLR’s lackluster 1 year Chart
You may ask why doesn’t Evergreen’s chart look like the other two? Probably because the droids in their robot solar factory will someday enslave us, much like what happened in the Matrix.
Seriously though, the reason why Evergreen’s Chart doesn’t look like the other two is because they are way ahead of the game – SPWR for example brings in $624.96 million while Evergreen’s revenue is a mere $80 million. Plus, analysts estimate that SPWR’s revenue will increase to $1.21B. That’s quite an increase over just a year. In comparison, Evergreen’s estimate for 2008 is $98 million.
But who wants to buy shares of SPWR for $125 when you can get in on Evergreen for just $11 to $12? The company has given a stellar performance over the last year, beating revenue and earnings estimates – and we think they will continue to do so. Evergreen has a lot of room to grow to the upside, think anywhere from $15 -$25 in the next year, while not very much room to the downside. Think $7, and that’s if market conditions get really bad. I like that risk/reward ratio.
Just like Agent Smith popping up at the opportune time, Evergreen received an upgrade this morning just after I posted this article. ThinkEquity Partners analyst Jonathan Hoopes lifted his rating on Evergreen shares to "Buy" from "Accumulate" and raised earnings estimates and shares responded by moving up 10%.
Hoopes is "more confident" that Evergreen's so-called Quad Ribbon equipment will produce higher quality silicon wafers using less silicon than traditional machines. "While the next-gen Quad Ribbon wafer technology is still in lab stage, the main technical issues appear to have been resolved, and the company is presently engaged in improving the platform and output," Hoopes said. Evergreen's target to start production in the second half of 2009 is "well within reach, Mr. Anderson" he added (minus the Mr. Anderson comment).
Solar energy is becoming a very rich and powerful industry. For years solar enthusiasts have been telling us the time is at hand, and it seems that they could finally be right.
Co-Founder of theStockMasters.com
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