Week 8/8/10 - 8/15/10 (SOLR)

Company: GT Solar International (SOLR) is one of the leading suppliers of manufacturing equipment to the solar industry. GT Solar designs, manufactures and markets CVD reactors for polysilicon manufacturing and DSS furnaces for silicon ingot/wafer production. The company supplies these two major product lines to polysilicon manufacturers and PV cell manufacturers.

Thesis: Demand from the rapidly growing solar PV industry will drive market for process critical DSS furnaces and CVD reactors.

Strengths:

• Order improvement in the CVD reactor business is exceptionally strong indicating a very strong trend for polysilicon capacity expansion, market share gain and adoption of next generation technology.
• Recently acquired Crystal Systems and will now be in the business of selling sapphire substrates for LED makers and will transfer over to becoming an equipment supplier in the space within the next 12-18 months.
• Company has $1.89 per share in cash, which is almost one quarter the share price. Gross margins are good at 40%. Net income margins are over 16% after paying 36% taxes.

Risks:

• Cancellations.
• Internal development of technology by customers.

Week 7/12-7/18

Pick of the week buy Pfizer (PFE) or sell August 14 strike (PFE) puts:

Why I like Pfizer: http://contrarianedge.com/2010/01/18/the-case-for-pfizer/

Also to borrow from David Einhorn of Greenlight Capital:

"Though the company announced a strong first quarter earnings result of $0.64 per share, a weaker Euro caused analysts to reduce 2010 consensus estimates from $2.25 to $2.15 per share. Longer term concerns about potential austerity measures in Europe and setbacks on some pipeline products also weighed heavily on the share price. As investors gain confidence in PFE’s future sustainable earnings at these levels, which we believe are attainable, investors may pay a higher multiple of earnings than the current sub-7x."

Investment Thesis: As investors gain confidence in PFE's earning potential the multiple will expand, in the meantime the company is paying a 4.9% yield.