Is Small Cap GT Advanced Technologies Inc (GTAT) a Less Risky Solar Stock Bet? ASTI, STRI & TAN

Solar stocks have not exactly given buy and hold investors a smooth ride, but small cap GT Advanced Technologies Inc (NASDAQ: GTAT) could be an interesting materials play on the solar sector – meaning its worth taking a closer look at the stock along with potential peers like Ascent Solar Technologies, Inc (NASDAQ: ASTI) and STR Holdings, Inc (NYSE: STRI) plus solar ETF Guggenheim Solar ETF (NYSEARCA: TAN). I should mention that just last week, we added GT Advanced Technologies to our SmallCap Network Elite Opportunity (SCN EO) portfolio for both fundamentals and technical reasons and we are already up almost 9%.

What is GT Advanced Technologies?

Small cap GT Advanced Technologies is a leading diversified technology company producing advanced materials and innovative crystal growth equipment for the global electronics, solar and LED industries. The company says its products accelerate the adoption of advanced materials that improve performance and lower the cost of manufacturing while principle products include:

Polysilicon Production Equipment and Services  PV Ingot Growth Systems  Power Electronics  Sapphire Production Solutions Sapphire Materials Advanced Thermal Processing Systems Emerging Technologies

As for potential performance peers or benchmarks, Ascent Solar Technologies offers lightweight CIGS modules for seamless integration of solar power into a limitless number of applications without the restrictions of conventional glass panels; STR Holdings is a worldwide leader in solar panel encapsulation; and Guggenheim Solar ETF seeks investment results that correspond generally to the performance of an equity index called the MAC Global Solar Energy Index.

What You Need to Know or Be Warned About GT Advanced Technologies

In mid March, Canaccord Genuity analysts Jonathan Dorsheimer and Josh Baribeau reiterated its buy rating on GT Advanced Technologies based on the firm's possible opportunities as a supplier of sapphire displays for Apple's iPhone 6 and other smart devices. Moreover, Canaccord Genuity analysts believe the company will benefit from a global rebound in demand for solar products following a four-year slump plus they added: "GT has an increasing number of 'irons in the fire,' which reduces diversification and customer concentration risks."

Earlier in March, Goldman Sachs analyst Brian Lee initiated coverage of the stock with a Buy rating, noting that the iPhone will be worth $15 to $25 per share and he expects the deal to significantly raise the company's earnings plus provide positive catalysts for the stock in the second half of 2014. Lee believes GT Advanced Technologies could benefit as companies in that sector increase their capital expenditures. In addition, Credit Suisse raised GT Advanced Technologies' price target to $24 from $18 while GTAT also announced the signing of a $336 million supply agreement with Cosmos Chemicals Berhad to provide equipment and technology for a 25,000 metric ton annual (MTA) polysilicon facility. The project is sponsored by Saudi Arabia based Project Management & Development Company (PMD) and will be located in Sarawak, Malaysia.

Investors should note that according to Yahoo Finance data, GT Advanced Technologies had short interest of around 29.70% as of mid March while HighShortInterest.com data lists short interest of 26.50% as of April 1 – meaning all of the recent news has caused some outsized stock movements as the shorts scramble to cover their positions.  

Otherwise, it should be mentioned that GT Advanced Technologies has reported revenues of $298.97M (12 months ending 2013-12-31), $379.65M (9 months ending 2012-12-31), $955.71M (12 months ending 2012-03-31) and $898.98M (12 months ending 2011-04-02) for the past four years along with net losses of $86.65M (12 months ending 2013-12-31) and $142.31M (9 months ending 2012-12-31) plus net income of $183.40M (12 months ending 2012-03-31) and $174.75M (12 months ending 2011-04-02). GT Advanced Technologies ended last year with current liabilities of $185.65M and long term debt of $283.91M that is more than covered by an ending cash balance of $498.21M.

Share Performance: GT Advanced Technologies vs. ASTI, STRI & TAN

On Tuesday, small cap GT Advanced Technologies rose 1.94% to $17.38 (GTAT has a 52 week trading range of $3.03 to $19.44 a share) for a market cap of $2.34 billion plus the stock is up 97.5% since the start of the year, up 426.7% over the past year and up 161.7% over the past five years. Here is a look at the performance of GT Advanced Technologies verses that of Ascent Solar Technologies, STR Holdings and Guggenheim Solar ETF:

As the above chart shows, GT Advanced Technologies has at least been a better bet than more pure play solar investments.

Finally, here is a look at the latest technical charts for all four solar investments:

The Bottom Line. For investors seeking some exposure to the solar sector but who lack the risk appetite for getting into a solar stock directly, small cap GT Advanced Technologies is worth taking a closer look at.

SmallCap Network Elite Opportunity (SCN EO) has an open position in GTAT. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.