MEMC Electronic Materials (NYSE: WFR) smashed through its upward technical resistance after it had reported an inline quarter but raised guidance signalling improvement in the downbeat solar industry. MEMC continues to trade at recession level lows, but has broken a steady downtrend, and it now ready to rocket higher. The company produces wafer for solar panels, but has recently come across something interesting – the acquisition of SunEdision. SunEdison, which WFR bought for a mere $300 million, now brings in approximately $300 million in revenue to MEMC’s business each quarter. Although the company was not profitable when MEMC purchased it, the MEMC-SunEd combination makes it the king of solar innovation. SunEdison has an economically sustainable business model in which it puts it own solar panels on the roofs of other companies’ building for example, for free, and then sells the solar energy back to the company for below-grid prices. It also sells the power back to the grid. This green energy and cost saving method is beneficial for both MEMC and a host of companies worldwide. MEMC is building a massive solar grid, which surprisingly generates massive amounts of power. MEMC also sold one of its large plants in 2010, which took the company less than a year to build. It sold the solar plant for almost $400 million.
Longer term, the initiative could drive down solar panel costs and a large scale adoption of the clean energy generators. This simply means more business for MEMC at lower cost.
MEMC Electronic Materials is trading just a few points off its 52-week low. The stock is still down over 21% from its 52-week high, and down considerably from its all time highs of over $90 in 2007.
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