China Ming Yang Wind Power (MY) Gets 125MW Wind Farm Deal, Looking More Bullish
Wind energy stocks have had the breeze at their back recently and China Ming Yang Wind Power (MY) has benefited from a resurgence in the sector. The company also announced some good news yesterday in the form of an EPC contract for two wind farms with a total capacity of 125MW in Bulgaria. The deal was actually inked back in December but the announcement wasn’t made until yesterday. The first batch of wind turbines were shipped out on Feb 6th. The deal is expected to provide further opportunities for the company in E. Europe.
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The first pilot project of 4.5MW is expected to be completed and commissioned in Somovit by mid summer while the larger 120MW portion is expected to commence in the 2nd half of the year.
“This represents a significant milestone of Ming Yang’s overseas market development, marking an important step in extending our footprint in mainstream European markets,” said Mr. Chuanwei Zhang, Chairman and Chief Executive Officer of Ming Yang. “Our strategic partnership with W. Power is a strong endorsement of our capabilities and innovative business models for overseas markets, which are designed to provide total EPC solutions by combining equipment, technology, capital and financing support.
As mentioned above Ming Yang is looking much better technically in recent months with a high volume surge above resistance of the 50 day moving average in mid January followed by an orderly digestion of gains in recent weeks. Look for a breakout from this recent consolidation as another entry point for a trade.
PowerSecure (POWR) Lands $15 Million In LED Lighting Contracts
PowerSecure (POWR) has announced this morning $15 million in new LED lighting orders from three major retailers which include reach in case lights, walk in freezer/cooler lights as well as shelf and canopy led lighting. The retailers expect to improve lighting quality while seeing a 70% reduction in energy usage. The PowerSecure brand of LED lighting is specifically engineered with retailers in mind to improve the customer experience.
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“We are excited to announce these new orders to serve three major retail chains with our LED lighting products. Our lighting technology is designed to deliver exactly what our customers want – lights that make their product displays “pop”
Shares of POWR aren’t moving on the news as the deal only represents about 15% of a quarter’s revenue, but this deal could lead to more orders from the retailers down the road so shouldn’t be overlooked. Technically, the stock is much improved and has been trading above resistance of both the 50 and 200 day moving averages for several days. It’s up over 20% since I called the shares “bullish in the short term” Jan 5th.
GT Advanced Technologies (GTAT) Beats, Guidance Remains Mostly Intact
GT Advanced Technologies (GTAT) reported good earnings results yesterday, beating analyst estimates. The company reported an EPS of .12/share on revenues of $153 million vs the expectations for .08/share on revenues of $146 million. However, it’s still well below the year ago quarter when the company posted $263 million in revenue as the solar market continues to struggle. There are some positive signs though particularly with the surge in demand in Germany which has helped push the solar stocks up in recent weeks.
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CEO Gutierrez commented on the quarter:
“We saw continued success in our polysilicon business, including our first ever reactor booking with an incumbent manufacturer. This helped drive a positive book-to-bill ratio and strengthened our overall backlog to $2.2 billion at quarter’s end. Our reactors and supporting technologies continue to be validated as the industry’s most technologically-advanced and efficient solutions for building viable polysilicon production facilities.
“In our sapphire business, we completed installation, received acceptance and recorded revenue on a significant number of sapphire furnaces. We continue to believe that our ASF™ solution offers the most viable path to low-cost, high-quality sapphire production. In PV, while we saw some pockets of improvement, on balance we continue to believe a broad-based turnaround is unlikely in the near to mid-term. With less than 10 percent of our current backlog coming from PV, our current exposure in this space is limited. Longer term, as the PV industry’s well-financed technology leader, we are well positioned to drive our customers’ critical move to higher efficiency and lower cost products with our DSS™450 MonoCast™ and HiCz™ products.
Looking ahead, guidance remains largely intact. While the company is taking down top line guidance for its EPS number from $1.45 – $1.65 to $1.45 – $1.60 due to a higher tax rate, the revenue target remains unchanged at $950 million to $1.05 billion. For fiscal 2013 which begins April 1st, the company sees modest growth over 2012.
Technically, shares of GTAT continue to round out a bottom and I believe a long term bottom is in at the $6.40 level. It may take some time for this bottom to complete but the trend is clearly up. The stock looks primed for a test of the next major level of resistance around the $10.50 level.
Zoltek (ZOLT) Reports Big Profit Surge, Shares On The Up & Up
Zoltek (ZOLT) has been one of the best green stock performers in recent months nearly doubling in price and it’s going to pop again tomorrow as the company reported a big surge in profit. The company posted a profit of .28/share on revenues of $47 million vs the analyst estimates for .05 in EPS on revenues of $46 million. That’s a huge improvement over the year ago quarter when the company posted a loss of .05 share on revenue of just $33 million. The CEO said the wind turbine business represents its biggest growth potential and continues to improve. He expects the large wind turbine segment to increase 15 – 25% per year for the next decade. Back in February CEO Rumy declared that growth is coming and the stock surged for a few days. However, it didn’t take long for the stock to take another big nosedive. If indeed, the wind energy industry is entering a sustained growth phase shares look enticing at current levels. This is great news for an industry that has really struggled.
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“We are pleased to report strong gains on both the top and bottom lines in the first quarter and continuation of the momentum we experienced in the fourth quarter of fiscal 2011,” said Zsolt Rumy, Zoltek’s Chairman and Chief Executive Officer. ”Our performance resulted from several internal and external factors. Our net revenues were up almost a third, despite the drag on our reported sales from the decline in the value of the Euro during the quarter, reflecting our expanded customer base in the wind energy business and increased sales of composite intermediate products. Our margins were positively impacted by a more profitable product mix, higher utilization of our production capacity, better operational performance, lower raw material costs and the decline in the values of the Hungarian Forint and Mexican Peso. We believe our first quarter results evidence that our carbon fiber business is on a path to increase significantly this year.”
Technically, the stock looks outstanding and you can’t say that for many green stocks these days. ZOLT should move to the top of most green stock watchlists based on the technical improvement and the results last quarter. The stock pushed above the 200 day moving average today with heavy volume and it’s up another 9% in after hours trading. While extended in the short term, any pull backs represent a nice opportunity for an entry.
Power One (PWER) Beats, But Guides Below
Power One (PWER) reported relatively strong results after the bell today beating analyst estimates on both the EPS and revenue side. The company reported an EPS of .21/share on revenues of $267 million vs the analyst estimates of .14/share on revenue of $239 million. However, the numbers are still significantly below the year ago quarter of .38 in EPS and $366 in revenue.
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“In 2011, Power-One again recorded over $1 billion in sales, highlighting our ability to execute and generate profits in difficult operating environments,” said Richard Thompson, Chief Executive Officer of Power-One. “Both SBUs performed well in the fourth quarter, as Power-One generated $48 million of operating cash flow in the quarter and finished the year with over $200 million in cash. Further, during the quarter, Power-One shipped 829 MW of inverters, bringing the 2011 total to 2.9 GW, versus 2.6 GW in 2010.”
“Power-One continues to expand in high growth solar markets, such as India and the United States,” continued Mr. Thompson. ”As we move forward in 2012, look for Power-One to provide innovative new products to meet our customers’ demands for better yields, higher uptimes and greater control of their PV assets.”
While the company beat this quarter, next quarter’s estimate isn’t so rosy so shares could come under pressure despite the beat tomorrow morning. The company is forecasting revenue of only $190 – $210 million vs the analyst estimate of $226 million due to uncertainty on feed-in-tariffs and other legislation, as well as global macroeconomic uncertainty.
Technically, PWER has improved in recent weeks and may be a good bottoming out play depending on how it holds up after this earnings report. The stock surged above the 50 day moving average and has been able to hold what is a new level of support there.
Ormat Technologies (ORA) Cuts 2012/2013 Rev Forecast Due To Falling Nat Gas Prices
Ormat Technologies (ORA) is falling more than 7% in heavy volume this morning after it cut its revenue forecasts for 2012 and 2013 due to changes in power purchase agreements for its Heber, Ormesa and Mammoth geothermal plants in California. The company initially thought that the new pricing would have a smaller impact on revenues resulting in a reduction of $9.5 and $6.5 million over the next two years. However, as a result of falling natural gas prices and the delay of California’s cap and trade program, the company now sees revenues decreasing by about $25 million in both 2012 and 2013. Despite the drops, the company still expects 2012 revenue to equal or come in higher than it did last year, but official guidance will be discussed during the earnings report on Feb 22nd.
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Commenting on the revised guidance, Dita Bronicki, CEO of Ormat Technologies, said: “Revenues from new projects and our strong product segment pipeline should offset the impact of the current natural gas prices. While there are expectations that natural gas prices may increase due to various market conditions, such as LNG exports, we will continue to seek alternatives to the variable pricing terms for our SRAC PPAs.”
Technically, ORA remains in a long downtrend and still technically weak. Today’s move is a definitive failure at resistance around the 50 day moving average and the stock should be avoided at this time.
Suntech Power (STP) CEO: “Solar Now Competitive Energy Source”
In an article over at CNBC Suntech Solar (STP) CEO Zhengrong Shi said he is upbeat on the solar sector highlighting the fact it is now becoming competitive with traditional energy sources, dropping from $6/watt 10 years ago to nearly $1/watt now.
While upbeat in the longer term, he did acknowledge the difficulty short term as over supply continues to be an issue.
“Right now, there is an oversupply situation, manufacturing capacity is expanding faster than growth in the market. The industry is going through consolidation,” he said.
Commenting on demand, he sees sizable growth in the US, China, India and South American markets and mentioned that in India solar power is already cheaper than diesel.
I’ve been saying it for several weeks now and still believe it. The likelihood of a solar bottom has increased significantly in recent weeks with many solar stocks pushing above resistance of the 50 day moving average. Currently, they are resting and pulling back to what is now support of those 50 day moving averages creating nice entry points for those that missed the initial run. I do think you can be patient and scale in slowly. The overall market is extended and due for a pull back which would likely put decent pressure on solar stocks in the coming weeks.
LED Stocks Hit On Needham Downgrade Of Veeco Instruments (VECO) & Rubicon Technology (RBCN), But Sector Shows Signs Of Bottom
Shares of LED stocks are under pressure this morning after Needham downgraded both Veeco Instruments (VECO) and Rubicon Technology (RBCN) due to slowing demand and over capacity. That’s essentially the same analysis analysts have made for solar stocks which have mirrored the performance of LED stocks. It should be noted that both green sectors are emerging from the dead and are greatly improved technically. I mentioned solar stocks bottomed out a few weeks ago and seeing signs that LED stocks may be bottoming out as well as they have now taken out resistance of the 50 day moving averages and now returning to what is now support of those levels.
Anyway, on to the downgrades as highlighted by Forbes. I’ll summarize here.
Veeco: cut from Buy to Hold with price target reduction from $34 to $25 (about where it trades now). They believe the recent run in the stock limits near term potential and that a slow down in demand may be more prolonged than first thought.
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The Rubicon notes are nearly identical, but it’s getting hit the hardest today most likely due to the fact it’s most reliant on the LED market while Veeco is better diversified.
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MEMC Electronic Materials (WFR) Posts Prelim Results, EPS To Be Lower
MEMC Electronic Materials (WFR) is reporting Q4 preliminary results this morning. The company anticipates revenue in the range of $753 – $792 million with non GAAP EPS loss in the range of .17 – .23/share.
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"We responded to the continuing cyclical downturn in the semiconductor industry and the severe market disruption in the solar market by taking decisive action through a significant restructuring that we believe will strengthen our business going forward," said Ahmad Chatila, MEMC’s Chief Executive Officer. "Although our solar business achieved record growth in 2011, interconnections, which exceeded 100 MW in the fourth quarter, fell short of our expectations. As we begin 2012, our focus is on operational excellence in completing our restructuring plan and profitably growing our solar and semiconductor businesses."
The company is expected to report official results after the bell on Feb 15th.
The stock is holding up well this morning despite the less than bullish news and technically, there is some glimmer of hope for WFR. The stock surged above the 50 day moving average Jan 11th and has been able to hold what is now a new support level. I think shares of WFR are compelling down here at least for a smaller scale in trade. It appears the worst may indeed be over for shares of WFR.
Tesla’s (TSLA) Wild Friday ..Overblown?
I was away from the market Friday and getting caught up with all the latest today. Looks like I missed quite a day for Tesla on Friday with the stock plummeting 20% on news two key engineers working on the Model S left the company.
It appears based on today’s quick recovery that fears of internal turmoil may be overblown. The Fool has a great run down on the events, I’ll summarize here.
Initially the company including Musk dismissed the report as overblown, but decided to do a conference call following the big move lower ahead of today’s open. The PR move worked well with the stock gapping up big and nearly closing the entire gap on Friday’s loss.
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According to Musk, the two engineers were important to the Model S development but one was not the head engineer as Bloomberg reported and they were not responsible for the initial design but rather optimizers. .. specifically finding ways to reduce weight without compromising safety. Musk went on to say that their departure wasn’t unexpected as the company scaled to higher volume production and that the real problem was with how their departures were communicated. He acknowledged it should have been done sooner before the earnings call which is when the company had planned to announce it. Bloomberg got out in front and created an impression that Tesla wanted to dump the news on a Friday afternoon in addition to reporting the inaccuracy.
More importantly Tesla indicated they are on track with the Model S and that extensive crash and safety testing continues. The plan to use many small batteries instead of a few larger ones will improve safety and help avoid the issues the Volt has had. The company highlighted the fact that the more than 2000 Tesla’s, some of which have been in serious accidents, haven’t had fire issues. It plans to launch the Model S with a five star rating in all crash testing.
In my experience, these kind of events where there is some management credibility issue or some uncertainty related to news, a stock is weighed down for a period of time. If you had the guts to jump in at the lows Friday, that was a heck of a trade, but I’d avoid it up here for a few weeks to a few months and see how this all plays out. Technically, shares of TSLA are still in a basing period and below both key support areas of the 50 and 200 day moving averages, so no reason to get in at current levels. Wait for the dust to settle.
