American Superconductor (AMSC) with $450 Million Follow Up Order from China

Submitted By Trader Mark
I've been doing a lot of work the past month on finding alternative energy plays that are not having to do with solar, and I found a few names and now have a new watchlist. Most of these stocks are much smaller than the standard fare I buy, so I am being cautious and waiting for some of these stocks to pullback in price, but they have been extraordinarily strong even with these selloffs 2 of the past 3 weeks. American Superconductor (AMSC) is actually a name a reader brought up to me a month or so ago when we were asking for some new ideas... this is not a new name to me but after watching the stock I had to take another look. Much like Energy Conversion Devices (ENER) (which I highlighted in early May in the upper $40s, and is now in the mid $60s) this has been a "hope" company for a long time - long on promise, but short on execution. [May 8: Energy Conversion Devices - Is the Turnaround Finally Here?] But we've seen how the ship has appeared to come in for ENER, and perhaps the ship is coming in for controversial AMSC as well. They received a huge follow up order today. This appears to be a 3 year contract for $450 million. Considering the company is only doing under $200 million in revenue in total this year, the magnitude of this contract is enormous for this size of company. The stock performance today reflects that. (congrats to the reader who owns this!)

American Superconductor Corporation (NASDAQ: AMSC - News), a leading energy technologies company, today announced that it has received a $450 million order from Beijing-based Sinovel Wind Corporation Limited for core electrical components for 1.5 megawatt (MW) wind turbines.
The contract calls for shipments to begin in January 2009 and increase in amount year-over-year through the contract’s completion in December 2011.
AMSC’s wind turbine electrical systems and core electrical components include the company's proprietary PowerModule™ power converters. They enable reliable, high-performance wind turbine operation by controlling power flows, regulating voltage, monitoring system performance and controlling the pitch of wind turbine blades to maximize efficiency.
“Sinovel is the epitome of business success in China and is one of the fastest growing wind turbine manufacturers in the world,” said Greg Yurek, founder and chief executive officer of AMSC. “The core electrical components covered under this contract will be used to support more than 10 gigawatts of wind power capacity, nearly double China’s total wind power installed base at the end of 2007. It is invigorating to see Sinovel’s success in bringing much needed electrical generation capacity to the Chinese power market at a crucial time in that country’s expansion. We are proud to work in tandem with Sinovel on this important endeavor.”

Again there are some tertiary "wind" plays that people are hyping, but I am familiar with most of them, and they generally are either not pure plays or don't exactly have the type of management you can trust to execute. So I've been digging deeper to find some more ideas and have a handful now - I just would prefer the stock prices falter so I can get better prices. Maybe the next time oil "implodes" to $120 ;).

Specific to American Superconductor - again this has been a long time "hope" stock, full of promises... I remember it even from the late 90s when it spiked along with the rest of the "hope" stocks (Fuelcell Energy (FCEL) anyone?). But maybe for some of these names, the rising tide is finally creating the backdrop and their time has come.

AMSC is a leading energy technologies company offering an array of solutions based on two proprietary technologies: programmable power electronic converters and high temperature superconductor (HTS) wires. The company's products, services and system-level solutions enable cleaner, more efficient and more reliable generation, delivery and use of electric power. AMSC is a leader in alternative energy, offering grid interconnection solutions as well as licensed wind energy designs and electrical systems.

No position but wishing I had bought the darn ENER