From Cabot Wealth Advisory 9/16/10 Sign up for free Cabot Wealth Advisory e-newsletter
A popular saying around the Green investing world right now is that Green stocks are at the same stage as Microsoft was when it released Windows 1.0 or where Motorola was when it rolled out its $4,000 DynaTac mobile phone. With mandates like these in the world’s three largest economies, that hardly seems an exaggeration.
Today I have a stock that is already experiencing the initial wave of all that investment. It’s a Chinese solar maker with a good European client base.
The solar company is ReneSola (SOL), a solar wafer maker that is vertically integrated, meaning the company controls its product line from sourcing its own polysilicon through fashioning its own solar panels. It’s a fast-growing company that has gone from its founding in 2005 to being the third-largest maker of solar wafers in the world this year.
Margins are improving as the cost of the raw material for panels has been falling sharply. Its other costs are dropping too, thanks to manufacturing efficiencies (its producing larger wafers) and more energy-efficient factories (slashing high electric costs). ReneSola expects to hit record sales this year of $795 million and I expect it to do even better at around $1 billion in sales for 2010. Cabot Green Investor bought ReneSola shares at 7.45 in July, and shares have since rallied 40% to over 10. With estimated earnings of $1.26 per share for the current year, ReneSola shares are still cheap at just eight times earnings.
Brendan Coffey is a member of the Cabot investment team. A veteran financial journalist, Brendan has spent more than a decade writing about investing for publications including Barron’s, Forbes, The Wall Street Journal and a number of private-client brokerage newsletters.