Raymond James & Associates’ alternative energy analyst Pavel Molchanov has three solar and wind plays for investors during this time when the credit crisis and the recession have combined to force many green energy projects to be postponed or cancelled. Why these three? Because, Molchanov told EnergyTechStocks.com in an exclusive interview, each has what might be considered a captive revenue stream that is helping protect it from the economic downturn.
The first of Molchanov’s three is SunPower Corp. (SPWRA) “I think (SunPower) will go up and, at a minimum, outperform its peers,” Molchanov told EnergyTechStocks. He noted that SunPower’s core competency is utility-scale solar projects and that in Europe and the U.S. there is a significant backlog of such projects. Explaining why there is a significant backlog despite the credit crisis, Molchanov noted that utilities still have access to capital and that, in the U.S., more than half the states have so-called renewable portfolio standards that continue to drive utility investment in alternative energy despite the recession.
The second of Molchanov’s investment “ideas,” as he called them, is GT Solar International Inc. (SOLR). “You might think this company would be at risk,” he said, noting that GT Solar makes equipment for the solar industry, an industry in which demand has “has fallen off the cliff,” as Molchanov put it. But the Raymond James analyst said GT Solar’s backlog is supported by prepayment of up to 40% of the purchase price. Consequently, Molchanov said, the company hasn’t experienced cancellations and its backlog is higher than it was six months ago.
Molchanov’s third investment idea is American Superconductor Corp. (NASDAQ:AMSC), which he described as a combination wind and power grid play. Molchanov said about two thirds of the company’s revenue comes from the Chinese wind industry, which consists entirely of state enterprises whose spending is recession-resistant. Molchanov added that the other third of the company’s revenue comes from U.S. electric utilities and government research grants, two other recession-resistant sources of income.