Seeking Alpha: Will Gamesa Move From Survive To Thrive?

There has been plenty of skepticism regarding Spanish wind turbine company Gamesa's (OTCPK:GCTAY) ability to continue to compete in the volatile and very competitive global wind turbine market. While Gamesa has had past challenges with product quality, project financing, and its cost structure, management has been doing a good job of executing a turnaround plan based on better margins and a focus on growth markets like India, Brazil, and Mexico. I do think Gamesa can continue to outperform on volumes and margins, but a lot of this is in the share price now and I believe Gamesa management must begin convincing investors that it has a follow-on strategy in place to not just survive in the market but to thrive as a leading player.

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Will Gamesa Move From Survive To Thrive?

Seeking Alpha: Gamesa Continues To Run On Its Second Wind

Spanish wind turbine manufacturer Gamesa (OTCPK:GCTAY) (GAM.MC) has continued to face quite a bit of skepticism from analysts regarding its turnaround prospects, but the company continues to execute on its turnaround plan. That plan has led to high single-digit order growth for 2013 and a return to double-digit growth in the fourth quarter, and the stock has continued to recover with the shares up about 250% over the past year and another 60% since my write-up in September ("The Street Still Doubts Gamesa Has A Business For The Long Term").

There is always a risk with turnaround stocks that investors will push their luck and hold on too long. To that end, Gamesa is not out of the woods. The company is still looking up at the global market shares held by Vestas (OTCPK:VWDRY), General Electric (GE), and Siemens (SI), and moving into the offshore market (where Siemens and Vestas hold more than 80% share) with Areva (OTCPK:ARVCY) could prove tantamount to a bunny jumping in a wood chipper. Should Gamesa manage mid-single digit revenue growth and additional margin improvements, these shares could have another 10% or so left in them before settling in to market-par return.

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Gamesa Continues To Run On Its Second Wind

Seeking Alpha: The Street Still Doubts Gamesa Has A Business For The Long Term

Retail investors always react angrily whenever you mention it, but even the hottest markets always come back to real-world concerns like economic value added, margins, and cash flows. Nobody wanted to hear about the per-kWH costs of wind power or the importance of government subsidies back in the glory days of the renewable/alt energy bubble, but the chickens ultimately came home to roost (as they always do), and they left a big mess on former high-fliers like Vestas (VWDRY.PK) and Gamesa (GCTAY.PK) (GAM.MC).

Extreme industry over-capacity and order declines tied to lower government subsidy payments have forced turbine manufacturers to restructure their operations and rein in their ambitions. To that end, I think Gamesa has made a lot of progress, progress that shows in the 220% jump in the share price over the last year and the more than 450% appreciation from the worst of the lows. While Gamesa still has to deal with well-heeled rivals like General Electric (GE) and Siemens (SI) and a host of low-cost Chinese rivals, I think Gamesa's stable turbine market share is an underrated positive in this story, and it looks like the market still doesn't quite believe that this is a viable story for the long-haul.

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The Street Still Doubts Gamesa Has A Business For The Long Term

Investopedia: Can Zoltek Keep The Wind At Its Back?

Here's a little secret for investors looking to take big swings at potential multi-baggers: seek out small, poorly-followed, heavily-shorted stocks in out-of-favor industries. Pick the right one at the right time and the gains can be tremendous. That was shown yet again last week as carbon fiber producer Zoltek (Nasdaq:ZOLT) obliterated analyst expectations and reignited hopes that wind power and green power stocks may have a better 2012 in store.

Great Results Across the Board 

Zoltek is followed by just three analysts, and we're not exactly talking about Morgan Stanley or Barclays here, so "beating expectations" has to be taken with a grain of salt. Still, Zoltek reported that revenue rose 43% from last year and blew away the revenue estimate by 30% as the company saw a 33% jump in shipment volume.

To read the full article, click the link:
http://stocks.investopedia.com/stock-analysis/2012/Can-Zoltek-Keep-The-Wind-At-Its-Back-ZOLT-AMSC-HXL-GE0208.aspx

Investopedia: American Superconductor Flickering

The bad news just keeps coming for alternative energy company American Superconductor (Nasdaq:AMSC). Although the company thought it had made a major step forward when it diversified into wind turbine components, that plan has run off the rails recently. It remains to be seen whether the company can repair its relationship with a major customer and/or find a new and more stable business plan to grow the company. 


The Latest Setbacks
American Superconductor reported a double-whammy related to ongoing issues with its biggest customer Sinovel. The company announced that not only will revenue be "materially less" than $355 million for the quarter (which itself was a big step down from prior hopes), but the company would need an extension to file its 10-K due to the probable need to reverse already recognized revenue.

Sinovel is the second-largest wind turbine maker in the world (and the largest in China) and has been a huge customer for AMSC's turbine components business, making up close to three-quarters of sales. Unfortunately, the company decided a few months ago to stop accepting any deliveries of components for 1.5MW and 3MW turbines and hasn't fully paid for prior accepted shipments. (For related reading, see What Does It Mean To Be Green?)



The full article can be read at Investopedia:
http://stocks.investopedia.com/stock-analysis/2011/American-Superconductor-Flickering-AMSC-GE-SI-ZOLT-VWDRY-GCTAY0603.aspx.