Long-standing growth stock expert Toby Smith looks to Suntech Power (NYSE: STP) as a long-term investment in alternative energy. Here's the latest from his ChangeWave Investing.
"Suntech, like every other solar company, has been impacted by a lack of financing from the slow release of the Stimulus funds -- and its latest quarterly results reflect that.
"Prices for its solar panels fell 8% in Q2 and will likely drop another 15% to 20% in the current quarter. Still, Suntech's Q2 profit topped consensus by 3 cents on revenue that fell by one-third, to $321 million.
"In the quarter, STP's gross margin rose to18.6% in Q2, from 17.8% in Q1, as the price of silicon fell faster than the price of the manufactured cells.
"During its conference call, STP said there was a 53% increase in shipments for Q2 due to a seasonal pickup, improving project returns and some improvement in the credit markets.
"It also said that the tight credit markets are among the biggest challenges and, in line with this, Suntech cut its forecast for cell shipments.
"Meanwhile, STP continues to make significant investments in the United States and believes that Treasury grants will help to ease credit.
"The company has 2 gigawatts (GW) of projects in the United States and is on the short list for another 1 GW. In China, STP will probably benefit from government subsidy and tariff programs in the near future.
"Industry pressures persist and STP is not immune to them. Yet, the company is in a strong position for 2010 and, as conditions improve, STP stands to reap real rewards as the largest solar panel manufacturer in the world. Investors should continue to accumulate the stock.
