Contrarian Asset Play - Coal-Based Utilities

I don't even know the space, but it doesn't take a scholar to work out that coal-based utilities are persona non grata right now (they are the nuclear power plants of the new century). In classic Wall St fashion, the market has fled (and will continue to flee) the space, thereby abandoning what will eventually be highly undervalued assets and a great contrarian play.

Let The Sun Rain Down

Looked at Sunpower (SPWRA) on March 24th and modeled much reduced earnings and margins going forward. After reporting a few days ago, I see that 2009 earnings have been revised down from $2.03 to $1.36...my estimate was $1.31) and 2010 from $3.00 to $2.33 (my estimate is $1.81). I like solar long term (although I think it will exhibit highly cyclical characteristics similar to semiconductors) and the firm is a leader in its space, and it is off 79% from its high, so I am thinking its time to sharpen the pencil. Apparently polysilicon is still plentiful but demand for panels has stabilized. Additionally, funding coming through from govt programs could help free up capital for the sector going forward. Be watching.

Disclaimer: No position in this stock personally or professionally.