Energy Conversion Devices (NASDAQ:ENER) is a unique company that develops both solar panels and rechargable NiHM batteries for consumers and the auto industry. Because of low oil prices, I am not surprised that the solar sector has not had as huge a run as the mining/raw materials sector is doing, including Freeport McMoran (NYSE:FCX), Cemex (NYSE:CX), Cliffs Natural Resources (NYSE:CLF), and Alpha Natural Resources (NYSE:ANR). However when the sector takes off, the move will be vicious.
The Obama infrastructure plan's big focus is renewable energy ($150B for the next 10 years), and I am confident that the solar sector will take off any time before the January inauguration as the new president's commitment to renewable energy is unprecedented. Maybe a TV interview of the president elect will trigger the rally. Having said that, I am interested in Energy Conversion Devices for the following reasons:
- Oil is rebounding from its low, and it should continue as OPEC aims to cut production by at least 2 million barrels. The OPEC target of oil is $75 based on an earlier comment from Saudi Arabia (see link). This time they are going to make it happen because the industry simply can not survive with oil prices at $40.
- Energy Conversion Devices provides thin film technology that has lower costs compared to the conventional polyslicon technology. The only current competitor so far is First Solar (NASDAQ:FSLR). Here is what gives ENER an advantage over FSLR: the conversion efficiency. Based on information from the websites of the two companies, ENER's uni-solar PV panel has efficiency of 12%, while FSLR's TdCe solar cells has 10.8% (link). A startup company, Ascent Solar Technology, also reported 9.2% efficiency for its flexible Copper, Indium, Gallium, Selenide (CIGS) monolithically integrated modules, and is not ready for production. So ENER has a clear leading edge technology.
- 3. The Obama team has been promoting a clean car plan to develop battery driven/high efficiency cars. Apparently Energy Conversion Devices' NiHM battery technolgy is a good candidate. According to the company, "Every major NiMH battery manufacturer is using licensed Ovonic technology" (link). Customers include Sanyo Electric Co (OTC:SANYY), Matsushita (NYSE:MC), Samsung, Canon (NYSE:CAJ), etc. The company also has Metal Hydride Fuel Cell technology for next generation hybrid automobiles.
- Energy Conversion Devices reported strong Q1 earnings back in November, and reaffirmed revenue guidance of full year 2009 between $450M and $485M, while the analysts consensus is $459M.
Disclosure: Long FSLR.