American Superconductor: An Ultimate Winner in Wind Power

| About: American Superconductor (AMSC)

When it comes to wind power, you cannot ignore American Superconductor (NASDAQ:AMSC). The company provides an array of solutions based on two proprietary technologies: programmable power electronic converters and high temperature superconductor [HTS] wires. The company's AMSC Power Systems segment produces products to increase electrical grid capacity and reliability and supplies electrical systems used in wind turbines. The company sells must-have products in the wind power industry. This makes the company a unique player in the sector. The company stands out as a winner in several aspects compared to other players, such as Otter Tail (NASDAQ:OTTR), Kaydon (NYSE:KDN) and Trinity Industry (NYSE:TRN). 

Investors like its worldwide reach. AMSC has a strong reseach and sales teams in China, a big wind power market. The company  recently received a $450M follow-on order from Sinovel Wind. Keep in mind that this is a follow-on order and, in my opinion, there are more to come. According to the Global Wind Energy Councils Global Wind 2007 Report, Chinas installed base of wind power capacity grew more than 130 percent in 2007, to approximately 6.1 gigawatts [GW].

In the US, AMSC will have a siginicant contribution to T-Boone Picken's wind power project. This will be mean tens of billions in revenue for the wind power industry.

AMSC can also play a big role in existing power grid. The company recently provided a $60M superconductor technology for Long Island to transport electricity without energy loss, while the current transportation invloves 5-10% energy loss from grid to substation. Investors got to like this.

The company's stock price has had a good run in the last 6 months; the recent pullback (thanks to the financial sector) is a great opportunity for investors to add a position. The company had a great last quarter and I would expect strong earning in coming quarters.

Disclosure: Author holds a long position in AMSC

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