Chat Highlights – Solar growth prospects and Asia opportunity

Summary

  • Discussion about the fair price for solar stocks as well as future growth prospects.
  • Talking about buying the dips on Asia.

Each week we publish a summary of a few of the articles, topics and ideas found in the MoSI chat. We encourage you to visit chat to read about updates to our investments, share ideas, and ask questions. What follows are a few of the conversation threads from this past week and links to some videos and articles. Join us in the chat.

What is a fair price for SunPower (SPWR)?

jimmyjunior Feb 22

SunPower (SPWR) — I read the recent agreement that injected cash as being one that pushes the first lien out for 5 years along with $125M of funding, in exchange for 41.8M penny warrants, and a second lien if needed for $50M in exchange for another 33.8M penny warrants. With a current share count of 175M shares, those warrants dilute us by pushing the share count to 250M shares. If I thought the share price was $3.50 before the announcement, then the per share price drops to about $2.50, assuming the capitalization stays the same. I’m expecting SPWR to continue dropping. Of course, there is great value in pushing out liquidity concerns and getting rid of the “going concern” provision. Any thoughts on current valuation?

Kirk Spano Feb 23

I think the dilution is mostly priced, but traders can be traders and whip small caps around. What should the share price be on a return to peak revenue which is coming in a few years?

jimmyjunior Feb 22

Currently P/S is well below 1, and much lower than (RUN) and (NOVA). That said, both RUN and NOVA show strong 5-year revenue growth while (SPWR)’s is mediocre. Mgt’s actions read on-point, to me; but without growth and no clear competitive edge, they will become irrelevant in residential solar vis a vis RUN and NOVA. Maybe they can get back to peak revenues in 2014, and maybe they can close valuation gap with RUN and NOVA, meaning an overall 4-6X $2.50 (diluted), or up to $10-15. But growth must return immediately. Not clear to me how they can take market share from competition.

Kirk Spano Feb 23

Growth isn’t returning anywhere for 2-3 years. By then there’ll only be maybe 1/3 of the industry left. This is 2011-13 all over again. Look at those charts.

Coming soon – buy the dips on the ETF (AIA)

Kirk Spano Feb 26

buy the dips on iShares Asia 50 ETF (AIA) in coming weeks on slightly stronger dollar. Technically looking at a run to $60s soon.

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Links in articles posted in chat

‘Haines Bottom’: Remembering a legendary CNBC call 10 years later

https://www.mckinsey.com/capabilities/operations/our-insights/adopting-ai-at-speed-and-scale-the-4ir-push-to-stay-competitive?cid=other-eml-shl-mip-mck&hlkid=810420457f4045b693fda591c65cf7b6&hctky=14917585&hdpid=784208d6-6ca9-4d62-aed0-6f5f874877c2

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