Over the past few months, I've continued to accumulate a very substantial BWEN position, now at a blended split-adjusted basis of $2.20/share. The Production Tax Credit (NASDAQ:PTC) has made it into the "cliff compromise bill" and to qualify for this new extension the project only has to BEGIN construction in 2013, as opposed to the expired 2012 credit which required calendar-year completion. This will have a VERY meaningful impact on the 2013 wind industry and on BWEN in particular. Based on the numbers in my earlier Instablog post I think that by year-end 2013 this stock will see a $6-handle on it.
The next step for the PTC will be a multi-year extension with a gradual phase-out; this will provide enough certainty to project $12-$14 million in 2014 EBITDA less capex for BWEN. A 7x multiple on that plus $20 million in cash value for the NOL carryforwards would equal mid-$7s to mid-$8s in the stock price 18 months from now vs. yesterday's close of just $2.16.
Disclosure: I am long BWEN.