I’ve stumbled on an exciting investment idea. I found a company that has no need for financing for the next 2 years, is doubling capacity by 2010 using existing funds and cash flow from its profitable operations, has its capacity contracted for 10 years, has a 30% US federal tax credit for its product for the next 6 years, and is in an industry targeted by the US presidential candidates as very important. The shares are reasonably valued with a forward PE of 3.25, a PEG Ratio of 0.11, and cash and equivalents equal to about 20% of market cap.
Apparently I’m in the minority thinking this is an attractive opportunity. LDK Solar Co Ltd’s (LDK) stock went down 5.95% today.
In my screens I have identified at least 5 other solar companies with similar characteristics. Having watched solar stocks for the last two years, I have never committed funds due to their lofty valuations or their extreme volatility. But after the recent massive correction that has driven Camino’s SOLAR index down 75.0% YTD, I think many solar company valuations are compelling. I don’t know if an investment in these companies will perform tomorrow or next week, but unless there is a total meltdown in solar industry demand these valuations have my attention.
Mark has a position in LDK