Energy Conversion Devices (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 (FCX), Cemex (CX), Cliffs Natural Resources (CLF), and Alpha Natural Resources (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 (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 (SANYY.PK), Matsushita (MC), Samsung, Canon (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.