Uncle Sam's Boost for Solar (ASTI, FSLR, ENER)
Ascent Solar Technologies (NASDAQ: ASTI) may have a significant win under its belt in the new Army solar pact. The maker of thin-film solar modules has a new contract from the government that could beget more contracts from the government. We have been hearing more of pacts being struck with the armed forces and other critical government infrastructure facilities for localized on-site and mobile alternative energy now that there is so much concern about the safety of infrastructure after cyberwarfare attacks and the threat of such attacks. Ascent announced on Friday that it is partnering up with Energy Technologies to create PV-based products for the military.
The two will create hybrid solar power systems for soft wall shelters. Financial terms were not disclosed, but we have been under the assumption that such contracts are going to be much more commonplace ahead for solar players and could be a boom for some of the smaller solar players. With Ascent generating under $1 million per quarter in revenues, a little could go a very long way.
The company has recently signed two other pacts, one with TurtleEnergy and one with Goal Zero, over the last week or so. These might not be enough to alter the guidance, but traders and investors alike are going to hope here that the deal with the armed forces will be expanded perhaps for more government deals.
Ascent shares closed up almost 11% on Friday at $8.17 with an intra-day high of $8.30. Here is the issue… Its 52-week trading range is $2.19 to $8.83. How many solar stocks are within 10% of their 52-week highs? This one has risen on the pacts announced this week as it started outlast week under $6.50. Still, very few solar stocks are anywhere close to 52-week highs. First Solar, Inc. (NASDAQ: FSLR) would have to rise about 45% to challenge a 52-week high. Energy Conversion Devices, Inc. (NASDAQ: ENER) would have to rise some 400% to get to its old highs of the bubble valuation days. For Ascent, its highs in late 2007 and early in 2008 went briefly over $15 and $20, but that was in the boom and during the solar and energy bubble.
Ascent’s market cap is a mere $172 million and its revenues are still microscopic compared to the majors. The company is still expected to lose money through 2010 as its revenues are just starting to ramp up. The hope here is that profitability and growth would be sooner if this government contract leads to more government contracts. that of course is still an “if, then” scenario, but that is also why this speculative stock in the solar sector is having more and more interest and why it is trading close to a yearly high.
Many contracts in solar and energy companies are not defined other than by megawatts, so it is hard to tel if these will boost its revenue expectation much. But you know what the hopes are and why this could have massive upside as its revenues are effectively just getting under way.
JON C. OGG