GT Advanced Technologies May Outperform As We Approach A 2014 Catalyst

James Holden profile picture
James Holden

It's been quite a run for U.S. solar companies as the battle goes on between investors on the long and short side. Some of the top gainers include Sun Power (SPWR), First Solar (FSLR), Solar City (OTC:SCTY), and MEMC Electronic Materials (WFR), all with 52 week gains over 290%. Key ingredients that fueled much of the fire has been short interest and, with the exception of Solar City, profitability in 2014.

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If you are willing to take on additional risk GT Advanced Technologies (OTCPK:GTAT) could turn out to be quite lucrative in your portfolio. GT Advanced Technologies had a 34.8% short percentage of float on April 30, 2013 and projected 2014 EPS improvement to 36 cents.

Part of GT Advanced Technologies solar underperformance can be attributed to its problematic position in the industry. GT Advanced Technologies supplies equipment to a solar industry where module production overcapacity is a problem. Module production has been inconsistent at best which leaves little need for production equipment. DuPont currently predict global module production to decline 15% in the second quarter after a gain earlier this year. Because of a solar equipment glut most of 2014 GT Advanced Technologies projected earnings are expected from a diversification strategy which turned to sapphire production for LED and glass screens.

A solar catalyst is expected from GT Advanced Technologies in 2014 which could lead to a shake "up". The company is developing HiCz module equipment which increases module efficiency from 19% to 24% with no additional production costs. Upon release GT Advanced technologies should see solar revenue gains as module producers struggle to make the best product for the lowest cost.

A diversified way to benefit from potential future gains in GTAT is through an exchange traded fund. Two currently hold GTAT as one of their top positions. GTAT was last disclosed as the Guggenheim Solar's (TAN) fifth largest position and is positioned ninth in the Market Vectors Solar Energy ETF (KWT).

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Disclosure: I am long OTCPK:GTAT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article was written by

James Holden profile picture
I have been involved in the investment business both professionally as a financial adviser and personally since the early 1990's. Studying the market through various phases, I have had both successes and failure contributing to my experience. Currently, I am an educator with a Bachelors in Business Administration and Masters in Science Education from the University of Georgia.

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