WALL STREET’S TAKE ON NEW ENERGY

Examples of the insights in The Wall Street Transcript’s Alternative Energy issue, available at a cost of a mere $175.00:

(1) “[Ethanol] was characterized by compressing margins both from the top line and the cost side - a classic margin squeeze. Essentially what we had is an oversupply of ethanol in the United States…Then on the cost side, of course, corn being the main input for ethanol in the US, prices continue to skyrocket and currently corn is near $5 a bushel; that is a 12-year high. It was a textbook example of a margin squeeze from both directions…”

(2) “The weakness - and weakness is putting it mildly, I mean the huge selloff, the very violent selloff in the solar space since January 1, has been driven by three main factors. Number one, the broader market correction…The second reason is the drop in oil prices…The last reason behind the selloff was the concern in the market about a US recession…”

(3) “…The fear among some observers is that if the US does go into a recession, demand for solar power…will diminish. There are a couple of reasons why that is not really true…One rather obvious reason is that the US is not actually a major driver of the global solar market. It's just not. The US represents between 10% and 15% of the global solar market. Europe is about two-thirds of the market…The second reason is that, when we look at the historical trends in the solar market, recession had absolutely no impact on demand…The third point is that what drives solar demand today to a large extent are government subsidies… based in most cases on a vested interest, either from the environmental side of things or promoting renewable energy to encourage, let's say, energy independence, domestic energy production…”

(4) “…one company that we are recommending with a strong buy rating is SunPower (SPWR). This is a $6 billion company. It's actually one of the larger publicly traded solar pure plays…”

SunPower is among the solar companies the "Transcript" experts like. Green Econometrics likes it, too. (click to enlarge)

Biofuels and Solar Energy Discussed in Wall Street Transcript Alternative Energy Report
March 6, 2008 (The Wall Street Transcript via Yahoo Finance)

WHO
- Excerpted interview: Pavel Molchanov, Raymond James & Associates, Inc.
- 1st Roundtable Forum: Patrick J. Forkin III, Tejas Securities Group, Inc.; Daniel Mannes, Avondale Partners LLC; John S. Quealy, Canaccord Adams Inc;
- 2nd Roundtable Forum: Jonathan Hoopes, ThinkEquity Partners LLC; Adam Krop, Ardour Capital Investments, LLC; Brian C. Yerger, Jesup & Lamont Securities Corporation;
- Alternative Energy: Ethanol & Solar - Pavel Molchanov, Raymond James & Associates, Inc.; Solar Module Manufacturers - Daniel Ries, Collins Stewart LLC.
- CEO Interviews - C&D Technologies, Inc., Dewey Electronics Corporation, EnerSys, Linc Energy Ltd.

It doesn't take an expert to see which way the trend is going. (click to enlarge)

WHAT
The Wall Street Transcript’s Alternative Energy issue, a 58-page assessment of the sector based on 2 4-CEO industry-expert roundtables and in-depth commentary from 2 New Energy market analysts and 4 industry CEOs.

WHEN
The Molchanov take on ethanol in 2007: “…to be blunt, not a good year for the ethanol industry…”
2008: “…given the relatively depressed ethanol pricing - albeit better than couple of months before - combined with extremely high corn costs, we project that a typical ethanol producer, all in, will be at best breaking even this year and possibly losing money on the bottom line…”
The Molchanov take on solar in 2007: “…The average solar stock, and there are about a dozen now, was up over 150% in 2007…”
2008: “…but then in that same group of solar stocks, the average performance year to date has been roughly down 30%. Volatility obviously can work in both directions…”

WHERE
The full issue is available at The Wall Street Transcript or by calling (212) 952-7433.

An oversupply of ethanol. One of its many problems. (click to enlarge)

WHY
- Topics covered: Ethanol production, Thermal energy, Solar market, Legislative and regulatory outlook, Bipartisan political support, Solar modules and systems, Thin film solar companies, Prospects for biobutanol, Outlook for biofuels, The smart grid, Allocation of capital, Venture capital interest, M&A activity, Sector risks, Impact of volatility, Management performance, Tangential plays, Federal tax incentives, Polysilicon issues, Grid parity, wind and solar, Pricing of solar modules, Smart grid, Capital funding, Production tax credits, M&A activity, Material shortages, Investor interest, Cleaner coal technologies, Taxing coal emissions, Stock Picks, Stocks to Avoid.
- Companies discussed include: First Solar (FSLR); Monsanto (MON); Archer-Daniels-Midland (ADM); Energy Conversion Devices (ENER); VeraSun Energy (VSE); LSB Industries (LXU); DayStar (DSTI); Itron (ITRI); ESCO Technologies (ESE); Telvent (TLVT); Darling International (DAR); Zoltek Companies (ZOLT); General Electric (GE); Suntech Power (STP); First Solar (FSLR); SunPower (SPWR).

Venture capitalists show no sign of losing enthusiasm for New Energy. (click to enlarge)

QUOTES
- Molchanov, Raymond James & Associates, on ethanol: “…We have seen consolidation already begin to emerge. For example, VeraSun Energy (VSE) is in the process of buying US BioEnergy (USBE). VeraSun is the largest pure play ethanol producer, smaller than Archer-Daniels (ADM), but the biggest of the pure plays. US BioEnergy is the second biggest of the pure plays. So it is forming a very, very sizable company, a company that can really compete with Archer-Daniels on scale…”
- Molchanov, on solar: “…On an objective fundamental basis, solar economics are not driven by oil prices in any meaningful way. That is because solar is a source of electric power and not liquid fuel. What drives the price of electric power is not primarily oil but natural gas, coal and nuclear…”