Special Situations Investing

The Solar Sector: Tomorrow’s Winners Today

The solar industry has serious polysilicon supply constraints, as their is a steep learning curve in polysilicon production, and high fixed investments in plant and equipment, creating high barriers to entry. Thus, the power in the industry is currently concentrated in the hands of polysilicon suppliers, including MEMC (WFR), and Wacker Chemie (WCH.F). Downstream names that are worth looking at are SPWR, STP, ESLR, FSLR, and ENER. My best advice for fast growing, emerging industries is to buy the suppliers. Solar machinery is made by Roth & Rau (R8R.F), while the afformentioned MEMC and Wacker Chemie are excellent plays on polysilicon and are making money hand over fist. For more information, go to solarbuzz.com, an excellent, free industry website.