Friday, June 01, 2007

Paperstand (STP, TSL, SOLF, UNFI)

The WSJ’s ”Ahead of the Tape” column out saying that investing in China solar isn’t always a bright idea. Investors get a chance today to roll the dice on two investment fads, China and clean energy, with a single stock. LDK Solar makes its debut on the NYSE, offering more than 17m ADRs. The $450m it hopes to raise brings to about $1.5bn the amount China solar plays have raised in the US since Dec’05, joining Suntech (STP), Trina Solar (TSL) and Solarfun (SOLF). Yingli Green Energy lists on the NYSE next week. As one would expect with fad stocks, these shares can be volatile. Last month, China Sunergy soared 51% in its first day of trading. It's since given back nearly 30%. Wed, shares of Solarfun plunged 23% after it posted disappointing earnings. Even green investors are wary. "It's difficult to distinguish one co from the next," says Jack Robinson, of Winslow Green Growth Fund. "And you've got a mkt in China that's very much in a bubble. All the danger signs are there."

Barron’s Online discusses United Natural Foods (UNFI), whose shares have fallen 18% over the past 12 mo’s as investors fretted about the potential impact of a merger between Whole Foods and Wild Oats Markets. But United Natural still looks poised to turn leafy greens into plenty of crisp dollar bills for patient investors. The operational hiccups that impacted United Natural's 3Q results are short term and limited to the co's Western region, while issues surrounding Whole Foods' acquisition of Wild Oats are still theoretical. Last week's selloff has also pushed United Natural shares to an attractive valuation. The stock's forward P/E ratio of 18.8 represents a 23% discount to its 5y avg and a 13% discount to the packaged foods sector. In comparison, Whole Foods is currently trading at a plump 27.7 forward P/E, or a 71% premium to the S&P's 500. Growth catalysts for United Natural include continuing strength in its sales, an improved distribution network, and growing demand for organic foods. "Ppl want to live a healthier lifestyle and are more concerned about food safety, purity, obesity - all these issues are creating incremental demand for natural products," says Michael Warshawsky, of Barrett Associates. As more conventional grocers carry organic products and as Whole Foods and Wild Oats expand, Warshawsky adds, "it is going to be United Natural that will probably be the only co to service them" b/c of its size and infrastructure advantages.

“Inside Scoop” section reports that a tech-industry veteran has marked his recent election to the board of Sun Micro (SUNW) with a $1m investment in the networking giant. Michael E. Marks, the Chmn of Flextronics (FLEX) and a director at SanDisk (SNDK), purchased 200K Sun shares Wed at a price of $5.05 each. Ben Silverman, of, says Marks' purchase is a positive signal for Sun, particularly when combined with the co's $3bn share buyback announced on May 16. "In general, he strikes me as a pretty savvy investor," Silverman says.

No comments: