Top Solar Pick; GT Solar soars on Stronger-than-expected Growth
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  • Stock Alert GT Solar International Inc. (SOLR)
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    Top Solar Stock – GT Solar Stock Resumes on Growth Sustained by Robust Q2 FY2011

    GT Solar International Inc.’s (NASDAQ:SOLR) steady upward march was interrupted by the Chinese solar sell-off in the second half of October, when the company dropped 11%. Since then, SOLR has slowly recovered and as of November 5, traded at $8.84. The market anticipates a solid trading day for GT Solar on solid results for the second quarter of FY2011 featuring a sequential growth in revenues and earnings of 70% and 160%, respectively.

    GT Solar is a provider of polysilicon production technology, and sapphire and silicon crystalline growth systems and materials for the solar, LED and other specialty markets. The company’s products and services allow its customers to optimize their manufacturing environments and lower their cost of ownership.

    Revenue for the second quarter of FY2011 reached $229.3 million, representing nearly 70% growth over $135.2 million in the first quarter of FY2011 and approximately 120% growth over $104.2 million in the second quarter of FY2010. Revenue by business segment for the second quarter of FY2011 was 88.4% in photovoltaic (PV), 10.1% in polysilicon, and the balance in sapphire materials following this quarter acquisition of Crystal Systems. Diluted EPS in the second quarter were $0.28, versus $0.11 for the first quarter of FY2011 and $0.06 for the second quarter of FY2010.

    According to Thompson Reuters, analysts on average were expecting GT Solar to earn $0.24 cents per share on revenue of $199.2 million.

    As of the end of the second quarter of FY2011, GT Solar’s backlog was $1.16 billion, with $544.6 million in the polysilicon segment, $601.1 million in the PV segment and $13.0 million in sapphire materials. Net new orders for the quarter were $264.1 million up from $30.7 million a year ago.

    The solid demand for solar panels and the buildup of potential orders in the recently acquired sapphire business spurred GT Solar to revise upward its outlook for FY2011. The company now expects its FY2011 revenue to range between $775 million to $850 million, up from the previously provided range of $700 million to $775 million; and diluted EPS to vary between $1.00 to $1.10, up from the previously provided range of $0.90 to $1.00.

    Solar stocks have appreciated significantly in 2010 on increasing confidence that there will be strong demand for solar in the coming years. According to a report from Bloomberg New Energy Finance, solar power may meet 4.2% of the U.S. electricity supplies by 2020. Investments in solar energy reaching $100 billion during the next decade would boost capacity to 44,000 MW, up from 1,400 MW today. Even more, according to Adel El Gammal, general secretary of the European Photovoltaic Industry Association, countries in the world’s sunniest regions led by China, India and Mexico may buy as much as 1,100 GW in solar panels over the next 20 years, 50 times the world’s current capacity.

    Going forward, GT Solar is expected to fully benefit from the PV revenue momentum and with a magnified potential due to recent acquisition of Crystal Systems that serves the needs of burgeoning LED industry to further go up in price.

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