Already profitable and with a much larger market cap, GT Advanced Technologies is less speculative than OPTT or UQM, yet has seen its share price decline rapidly as well. GTAT's solar business probably explains that, as solar manufacturing stocks as a group have done poorly since mid-2011.
But the market may be mispricing GTAT on this basis for two reasons. First, GTAT is not a panel maker, but a business to business panel equipment provider, where orders have remained more consistent. Further, GTAT's other business, LED lighting, should be insulating it from the full vagaries of solar valuations.
Second, GTAT has a very strong balance sheet which should allow it to withstand solar's downturn, and the company remains profitable--it expects steady or modestly growing EPS for the next couple of years. Still, the company today trades at only 63% of sales and only 1.6 times book, so there's plenty of upside potential as the company comes back to an objectively reasonable valuation.
Trex is the one firm discussed here to have had outstanding share price performance so far this year, and with good reason. After losing $0.75 per share in 2011, the company is poised to earn $1.58 in 2012 and is forecasting $2.33 EPS for next year, resulting in a forward year PE of 14. Given their earnings growth, TREX need only return to their historical PE average just above 19 to deliver a nice return to forward looking next economy investors.
Disclosure: Green Alpha Advisors is long GOOG, OPTT, GTAT, UQM and TREX, but has no positions in AAPL, AMZN, NSU, FDX, UPS or LMT.
Garvin Jabusch is co-founder and chief investment officer of Green Alpha Advisors, and is co-manager of the Green Alpha Next Economy Index, or Ganex and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."