One of my favorite companies, Evergreen Solar Inc., is part of a group of companies that represent “alternative energy” in this market. As you know, this investment theme is one of the hottest on Wall Street, largely because of high oil and gas prices.
This innovative company just reported significant financial growth and recently announced it largest sales contract to date. The company signed a deal to supply $70 million of its solar panel products to one customer, with options that could bring the total value of the sale to about $170 million. For a small company at an early stage of development, these are big numbers!
Evergreen Solar looks poised for significant success over the coming years, and the company serves to illustrate how important innovation is to stockholder wealth creation. Both go hand-in- hand, and you really want see a defined track record before considering any equity investment.
All companies go through different cycles. Most importantly, you want to determine where a company is in its life cycle before you invest your hard-earned money. If you’re too early, you’ll likely sit on high-risk “dead” capital until the company gets going. Alternatively, you don’t want to invest in a mature company or industry, where technological innovation is lacking.
Plain and simple, you want to invest in a company when it has already established a solid footing for its future growth. The stock market is very quick to speculate on a company’s prospects. When a stock sees increasing buy volume, the market is usually illustrating its enthusiasm for a company. Evergreen Solar is a perfect example of a successful, early-stage company that is becoming a darling on Wall Street. The stock market is voting on this company right now by bidding up its share price with increasing trading volume.