Sign In »
Register Now!
Help
2:53 PM Tesoro’s (TSO -7.1%) surprise warning of a Q4 loss on weaker margins slams energy stocks, with Valero (VLO -3.3%) and Marathon Petroleum (MPC -5.6%) deeply in the red. Until Q4, the three refiners had been helped by a discount for crude oil because of an artificial glut caused by infrastructure constraints at Cushing, Okla., but that cost advantage has narrowed.
Adding to the injury are signs nat gas fracking has negative externalities including earthquakes. To this end I have written about the imperative for a new industrial revolution calling for a different energy model. This has variously been called the green movement, but I think survival movement is more accurate. Basically what I am suggesting is that fossil fuel is the definition of a late stage complex system requiring huge spending to even maintain. When you see components like refining in deep trouble, it means countries such as the U.S. could be affected given that long-integrated global supply chains (the supermarket model) could be disrupted. For further reading on complexity and collapse see Hydrocarbons Part III, and Collapse Outcomes.In the last six months all the top stocks in the new industrial revolution has been slaughtered. Much of this is political gaming as if the system is bound and determined to stick with the complex fossil fuel model, hell or high water. An example of far less complexity in the energy complex would be solar power especially in areas of the world where it is at “grid parity”, meaning competitive on an economic basis. One company that represents a classic play on this is Power One (PWER) which is #2 in what is called power inversion, which is essentially tech that gets the power from solar and wind farms or rooftop on to the grid. Mostly to date this has been from large commercial “energy harvesting” investment.
PWER is hardly a start up and has already scored $1.12 trillion in revenues, and will earn 80 cents a share in 2011 FY (against a $4 share price). Next year analysts are looking for 65 cents. PWER is currently producing at only half of capacity, giving it excellent operational leverage. That means this business can easily and profitably ramp up new revenue. They are situated to manufacture in Europe, the US and China. The valuation of PWER in a word, is shockingly cheap, net cash per share is 1.75 a share. On an enterprise value basis it sells at about four times 2012 earnings. More background can be gleaned here. In a capitalist system dominated by theft, this kind of play gets put on the back burner, and in fact is was successfully attacked by shorts who are positioned at a whooping 24% short interest. However, I still believe in good karma.
Frankly I am not sure about the controversy in these names. Although business in 2012 may be down, it is hardly in collapse. For example another favorite GTAT justed added to its backlog with a new order. I am scaling into PWER selling Feb 4 naked puts for a 1% position. IV is 70. Piotroski score (used to verify value investing picks) is perfect.
InPlay:
8:05AM GT Advanced Tech. announces two new orders totaling $66.5 million for silane and TCS production equipment and technology (GTAT) 7.42 : Co announced that it has received an order for Silane production equipment and technology from SMP Ltd. a joint venture between Samsung Fine Chemicals and MEMC Singapore, a subsidiary of MEMC Electronic Materials. The silane equipment and technology will be used in the production of fluidized bed polysilicon using MEMC fluidized bed reactor technology. This sale represents GT’s continued efforts to diversify its product offerings and widen its portfolio. In addition, GT has received an order for its TCS technology and equipment from a new polysilicon customer. These two orders total $66.5 million and have been included in GT’s backlog for its Q3 FY12, which ended on December 31, 2011. These orders are not related to the engineering services contract booked with another incumbent polysilicon producer in Q2FY12
View the full article
