(SPWR) - SunPower - (FSLR) - First Solar - Gregory Spear, Spear's Security Industry Analyst newsletter

Gregory Spear, editor of the Spear's Security Industry Analyst newsletter, believes that Iraq is on the brink of chaos and that a spreading insurgency is likely to lead to oil industry sabotage. Take a look at this featured expert�s profiles of two alternative energy companies, who are leaders in the crystalline and thin-film solar industries. Executive Summary from December 22 The Iraq Study Group Report takes a critical view of the situation in the Middle East, advocating for aggressive diplomacy, accelerated training of the Iraqi military and a gradual redeployment of troops out of harms way. Gregory Spear and his team doubt the recommendations will be followed. Rather, a temporary surge in troop strength in Baghdad is likely. Based on administration ideology, Spear and his team expect U.S. bases to be reinforced and troops consolidated there, digging in for a protracted presence. Heightened tensions in the area are virtually inevitable in 2007, and civil war in Iraq and the region is a definite possibility. Indeed, Spear and his team believe the entire region is on the brink of chaos. A spreading insurgency is likely to lead to oil industry sabotage. One way to play it is with alternative energy names. Spear and his team profile SunPower (SPWR) and First Solar (FSLR), two leaders in the crystalline and thin-film solar industries, respectively. SunPower (SPWR) is a crystalline solar cell manufacturer based in Silicon Valley that is raising the roof on the solar business. The company is headed by Richard Swanson, who received the 2006 Becquerel Prize for his outstanding contributions to the development of high-efficiency solar cells. Dr. Swanson is one of only two solar scientists to win both the Becquerel Prize and the William R. Cherry Award, which he received in 2002 from the IEEE for outstanding contributions to the photovoltaic field. In Spear and his team�s view, SPWR has the smartest and most aggressive team of scientists and managers in the field today. Spear and his team expect the company to be able to maintain its leadership position and drive technological advancement year after year. In terms of management, SPWR is a company growing production 100% a year and is likely to be able to sustain that growth rate for many years to come. Over the past year, SunPower increased its share of the California residential solar retrofit market by a factor of seven. Currently, it accounts for just 14% of the solar panels installed in that state, but Spear and his team expect the company to continue to take market share. Why? Its solar panels are twice as efficient as the competition, operating at an incredible 20%-22% efficiency, and therefore require half the roof space of other models. The all-black appearance is also esthetically pleasing, so retrofits are easy on the eye. SPWR has a large, highly efficient factory in the Philippines, adequate supply agreements for polysilicon from three manufacturers, and is working on developing its own ingot forming capabilities, which will vertically integrate the company to some degree. SunPower tripled solar cell manufacturing capacity in 2006 and expects to more than double that capacity by the end of next year�and then again the year after that. For the third quarter ended September 30, revenue was $65 million, up 19% sequentially and up 198% from the third quarter 2005. Technically, the stock has formed a large "cup and handle" pattern, which is a bullish configuration. First Solar (FSLR) came public less than a month ago and it is always risky to buy into newly public companies. To lower one�s risk, it makes the most sense to buy companies that have the potential to be a disruptive innovator in their industry and also sport a current competitive advantage. In the solar cell field there are two main types of products, standard crystalline cells made from silicon, and thin-film technologies that use alternative amorphous compounds. FLSR is in the latter category. The company is aptly named, as they are the first solar company to market with an affordable, massively scalable thin film product. There is competition on the way from outfits like Nanosolar. But for now, FSLR is in the catbird�s seat. The company's solar modules are built from a thin layer of cadmium telluride (CdTe) laid on to a 2� x 4� sheet of glass, producing a complete solar module in less than three hours. Not only is the patented process fast, but it uses only about 1% of the expensive semiconductor material required to produce crystalline silicon solar modules. Given the shortage of solar cell silicon, over which Spear and his team have seen bidding wars all year, this technology gives FLSR a momentous business advantage. The cadmium is recycled from zinc smelting waste, another plus and the modules themselves can be recycled. Another thing you should know about FSLR is that the individual homeowner is not its target customer. Instead, the company�s grid-connected products are primarily addressing the burgeoning demand from utilities, solar plant operators and system integrators worldwide. A $5 million loan in 2004 from the State of Ohio enabled the company to quadruple production in just one year. The company is expected to produce 40 MW this year, over 75MW next year and already has supply contracts for 1250 MW from now until 2012. In other words, this company has a six-year backlog and can sell product absolutely as fast as it can make it. The growth rate in production is comparable to that of SunPower, which has 50MW online in 2006 and 108MW expected for 2007. The valuations of the two companies on a per MW basis are also comparable. This article highlights the commentary of Gregory R. Spear for the Zacks.com audience. Gregory R. Spear provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "Spear`s Security Industry Analyst" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "Spear`s Security Industry Analyst" and 30-Day Free Trial. And get immediate access to current issues and special reports. Click here now. Here's How You Can Profit from the Pros Find out what other leading experts are saying about the market. And what stocks they are recommending. For free. Just sign up for our free email newsletter, Profit from the Pros, where we�ll give you the commentary, advice, and insight from those rare few experts who consistently beat the market year in, year out. | Blog Home| VitalStocks Home