NC180570
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Latest Comments4 Comments
Playing the Next Bear Market Rally
You say that:-
"A sensible way to play this bear market rally is to take a long position now and to close it when the indicator flashes a sell signal. My intention is to do just that, as well as sell some other stocks when the rally runs out of steam. That way I will have enough dry powder to take advantage of even better buying opportunities that I expect to materialize next year"
Question: The "long position" you refer to, is it SPY or the Q's or what? Also, how much of your portfolio would you invest in this position?
Thanking you in advance NC180570 Ireland
GeoEye Imagery Now on Google Maps
Acceptable Valuation Indicators - GEOY trades at about 4.16 times earnings per basic share (excluding extraordinary items); this compares very favorably to the MarketGrader-calculate... optimum PE ratio of 28.2, based on a historical 14.99% EPS growth rate, suggesting the stock is significantly undervalued. Our optimum PE Analysis assigns each stock the highest possible valuation afforded by its long term EPS growth rate; this historical growth rate measures the average year-to-year change in earnings per share for the company's last eight quarters (when available). Considering the company's revenue growth appears to be slowing down, cost cutting measures are necessary to maintain good levels of profitability. The stock trades at 1.86 times tangible book value per share (tangible book value is based on the company's common equity minus intangibles such as goodwill); this is an attractive valuation were management to undertake steps in an attempt to unlock the true value of assets on the balance sheet. It trades also at 3.67 times cash flow per share, a sign that investors are assigning relatively little value to the company's non-cash assets and its earnings potential. GEOY trades favorably at 1.71 times trailing 12-month sales, a 57.92% discount to the Diversified Commercial & Professional Services industry average price to sales ratio of 4.07. The company's market capitalization of $310.88 million is 93.81 times its latest quarterly net income (including depreciation), representing an exceptionally rich valuation.
T. Boone Pickens' $2 Billion Bet on Wind Energy
To clarify Jack Yteiv's comment regarding cost of producing electricity via wind in Ireland - yes at 5cent Kw/hr it does include transmission costs. As the electricity for sale is measured at the substation on the windfarm, the losses are negligible, but in any event are included within the 5cent Kw/Hr.
Regarding whether wind is going to get cheaper going forward, well thats debatable but here are some facts. In the last 4 years the cost per MW of installed wind generation has increased from €1-€1.2m to €1.5-€1.8m. Most of this increased cost has come due to the increased cost of turbines (except US manufactured read GE sourced in the last 6months). Another element of the increased cost has come from the pressure now to put connection cables underground rather than overhead.
On the other side of the equation turbines have become more efficient. On one particular site in Ireland a developer had initially planned to erect GE 1.5MW turbines. Planning took longer than expected and Nordex had released their N90 2.5MW turbines. The Nordex turbines Mw for MW will produce 17% more electricity than the GE turbines. Having said that, at this stage I would largely believe that wind technology is mature and further efficiencies will be small scale.
The limitations on windpower in any country are:
1. % if power currently being generated by wind - up to 20% generally no problem. Beyond this the intermittent nature of wind generation can cause problems
2. Getting planning permission to build the windfarm.
3. Reasonable proximity to the grid for connection
4. Reasonable wind resource (windspeed). Where windspeeds are lower such as in Germany 6mtrs sec V 7.5 in Ireland, they will use class 2 and 3 wind turbines which will have proportionally larger rotor diameters relative to the generator capacity of the turbines.
The issue of land for turbines is not a cost issue as the landowner will get a % of the gross electricity sale from the turbine. This is relatively fixed and therefore is not a cost that I see as going up.
At the end of the day I believe that windpower is the most effective and cost efficient method of generation for the first 20% of requirement so long as the windfarms are onshore. Its main limitation is the intermittent nature of the generation. Cost wise, I do not believe that it will get significantly more or less expensive.
It is important to remember that profitable wind generation is utility scale. In Ireland the average sized turbine is 2.5Mw with a tower 80-90mtrs to the nacell and with a 90mtr rotor diameter with an installed cost of approx €4m.
Disclosure - I do not have any solar, wind or oil stocks but would love to invest in solar and wind.
NC180570 Ireland
T. Boone Pickens' $2 Billion Bet on Wind Energy
You should be able to deduce from these figures that yes wind power is competetive and is at grid parity without subsidies of any kind except for the Gov underwriting the PPA.
As a matter of interest, the wind farm companies estimate that the cost of construction of the wind farms ranges from €1.5-€1.8m per installed MW and that the IRR of the projects range from 10-15%.
Finally, it is important to note that the wind speeds are very good in Ireland (7-8 mtrs sec for average sites) and also that these costs and returns relate to on-shore wind farms.
NC180570 Ireland