By Brendan Coffey
From Cabot Wealth Advisory 10/11/10 Sign up for free Cabot Wealth Advisory e-newsletter
As editor of Cabot Green Investor, I’ve been watching the market closely, and just last week the Green sector experienced a convergence of technical factors that are giving a very strong buy signal—one we have seen only twice in the last three years, and neither of those was strong as we are witnessing now. In those prior occurrences, we saw a four-week 40% rally in Green and then, in the much weaker signal of the two, a still-welcome 10% two-week rally. What gives me more encouragement this bull move has stronger—and longer—legs under it is the fact the broad market is rallying too, which adds momentum to the excitement Green stocks are now enjoying.
My stock pick for this Cabot Wealth Advisory is Amtech Systems (ASYS), a leader in a particular niche in the solar cell production process. Specifically, it makes the equipment necessary for cell diffusion, the process by which phosphorous oxychloride is diffused on solar wafers (allowing the solar conversion mechanism to be laid on top). The Arizona-based company also competes in the subsequent two steps of the solar cell manufacturing process: etching and adding antireflective layers through plasma-enhanced chemical vapor deposition (PECVD for short).
In its most recently reported quarter, ended June 30, sales rocketed up 250% to $43 million while net income was 42-cents a share. For the full year, sales are expected to more than double to $112 million and likely even higher: The company just announced that it booked a record $187 million in orders for fiscal 2010 (which, because of how revenue is recognized, likely doesn’t equate to what full year 2010 sales will be. Full year results will be announced on November 22.)
What I particularly like about Amtech is that it’s an established company, having started in 1983 to focus on semiconductor fabrication equipment, growing with key acquisitions over the years. I also like that, while it makes its equipment in the U.S. and the Netherlands, 85% of its customers are top-tier Asian solar makers including Yingli Green Energy (YGE). That’s important because industry dynamics favor larger manufacturers, who are expected to consolidate and grab market share from lower tier solar makers.
Cabot Green Investor recommended ASYS in its September issue, when shares traded at 15. They are now at 19 and looked primed to surge higher, although orderly pullbacks are to be expected in its climb.
|Amtech Systems (ASYS)
131 South Clark Drive
Tempe, Arizona 85281
|Index Membership: N/A
Industry: Semiconductor Equipment & Materials
Full Time Employees: 190