Although solar is touted as 'emerging' tech by folks who desire subsidies we've actually gone through a few boom/bust cycles over 3-4 decades which gives a small advantage to the old and decrepit who can remember the last go-round or two.
In theory.
The 2005-2008 mania was probably best exemplified by First Solar: Nov. '06 IPO at $20, $317.00 top tick in May 2008, $11.43 by June 2012. Yeah baby!
The yieldcos are not 'solar' in that speculative sense but rather a different species with their own set of idiosyncrasies and traps for the unwary.
From Barron's Tiernan Ray at Tech Trader:
Solar Basks in the Rosy Promise of the "Yieldco"
To meet the demand for yield, the tech world has created so-called Yieldcos, renewable-energy spinoffs promising dividends and high payouts.
The hunt for yield has spawned many curious investment organisms over the years—and the tech world has proved to be as susceptible to them as any industry.The latest intriguing creature roaming the landscape is the so-called Yieldco, a spinoff of renewable-energy companies, principally solar-power outfits, that is supposed to offer a solid dividend supported by stable cash flows and a high payout ratio.Yieldcos seem to be growing in popularity. Last month, SunEdison (ticker: SUNE), a St. Peters, Mo., company that installs solar-power panels, spun out TerraForm Power (TERP), a holding company that acquires and runs SunEdison-built projects. TerraForm priced its initial public offering at $25 a share on July 18, the high end of an expected $23 to $25. Since then, the stock is up 29% at a recent price of $32.35.There is talk now of First Solar (FSLR) also spinning out a Yieldco. Last week, management said it was nearing the conclusion of an evaluation process that will tell it whether to go that way. One analyst, Y. Edwin Mok of Needham, raised his rating on First Solar shares to a Buy the next day, on the "high likelihood" it will go the Yieldco route.Think of all this as tech investors catching a bit of MLP fever. MLPs, or master limited partnerships, are the gold standard when it comes to extracting yield in the energy industry, where pipeline companies and oil-and-gas explorers form partnerships, rather than conventional corporations, and pay a distribution to stockholders, which are largely shielded from income tax.As the MLP Roundtable discussion led by my colleague Michael Aneiro shows (see "The New Frontier for MLPs"), MLPs have remained hot despite fears of rising interest rates. The benchmark Alerian MLP Index is up 16.3% through the end of June, trumping the 4.6% return of the tech-heavy Nasdaq Composite Index.
Still, it's an odd turn of events for an industry like solar, which has been marked by booms and busts, to find itself in the staid company of pipeline owners. Before the 2008 recession, shares of First Solar, SunPower (SPWR), and other makers of solar cells soared on the premise that they would displace fossil fuels.
That promise soured when recession exposed the fragility of government subsidies that had propped up solar projects, many of which turned out to be too costly to survive without public assistance.After solar stocks crashed, the industry rebounded with a new, cleaned-up image. No longer was it based on the belief that solar-panel sales would surge, but rather that experts such as First Solar would act as project managers, generating stable cash flows—much like cable companies.Solar is still too expensive to replace fossil fuels, but it could be milked for cash, the logic went, while the world waits for that day to arrive.IN A SIGN THAT THE RENEWABLE-TECH Yieldco has come of age, some longtime MLP fans have bought into it. James Mick, a portfolio manager with Tortoise Capital Advisors, and a former MLP Roundtable member, says his firm invests in Yieldcos, though he wouldn't disclose their names. "Some of the Yieldcos meet the same criteria we establish for MLPs," he says....MORE
FSLR $67.83 last.
Previously:
