Ok so my contribution in starting a new thread is that when someone gets a bull stock idea they post it hear breifly explaining why they like it. Essentially a sales pitch. Benefits are 2 fold: 1) you get to verify your understanding of the company by explaining it in type, 2) others get good investment ideas (hopefully).
Tough call but I'm going to start it out with not Altria (MO)(which I think is the best stock to buy out there right now), but MEMC Electronics (WFR). WFR makes solar wafers formerly used only for semiconductor manufacturing but are now being used in solar panels. The company reports after the bell tomorrow (1/24) for their year end. Last year was about 1.6BN in revenue. However, they were just beginning to enter the solar market. Over the course of this year, they have almost sold out their solar capacity for the next 10 yrs signing deals that will bring in 12-15BN over that timeframe. They have room for one more contract which will be in the 1-3BN range, meaning, if you straight average that out over 10 years, they've doubled their revenue. Margins are better on solar meaning the sales will translate well to bottom line results. The market simply does not have this unreal visibility accurately priced in with WFR trading at a 24 multiple. I've been buying under 75 and have a 100 target on to start scaling out.
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Right so they double their revenue over ten years.... So like for like double their earnings?.. P/E of 24... doubled earnings implied p/e earnings of 12.... Thats cheap but over 10 years? Give me a break. The Dow returns 9.7% on a 100 year long term average. I think there are better options. whats your expected time period for this? month, year, decade?
ReplyDeleteI'm sorry but I think you have misunderstood the contracts that have been signed. They currently have locked up 15-18BN in revenue just from solar cells over the next 10 years. If you straight-line it, it would double their revenues NEXT year. obviously though it will be phased in over the years. the bottom line: the company's trading at 16 times next years earnings, they're earnings will grow at 26% next year and 20% long-term. The company is constantly expanding it's polysilicon capacity, which is its input, they're their own supplier and they sell excess on the market. They have 1.3BN in cash and strong consistent cash flow. So you will be seeing continued major expansion and additional share repurchase and dividends in the future. bottom line: if you're looking for a solar play, I think this is the most insulated with the best earnings visibility out there.
ReplyDeleteWell sounds like your have DYOR, I haven;t done mine so can;t fault you on yours.
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