After doing some followup research on Clear Skies Solar, I found indicators of a strong company that is poised to grow and exceed its current position of less than four pennies ($0.0388) in the OTC market. In my opinion, CSKH is a seriously undervalued stock, and that is why I have today purchased shares of this solar company.

Disclosure: Other than being a shareholder, I have no affiliation with Clear Skies Solar.

What Does Clear Skies Solar Do?

Clear Skies Solar is a solar electric installation company. The company sells solar power systems to commercial, industrial, and agricultural clients:

Since its launch, Clear Skies Solar has installed solar power systems for municipalities, real estate developers, agricultural locations, office and residential complexes, manufacturing plants, schools, and more. – About Clear Skies Solar, Inc.

The company designs and implements proprietary solar power systems for a variety of clients, and is also currently developing a remote energy monitoring system for the smart grid called XTRAX. Clear Skies stated in its Q1 2010 10-Q form that the XTRAX system will be a priority in 2010.

XTRAX is a patented smart grid energy monitoring technology intended to remotely provide users with detailed data about their energy usage. Clear Skies Solar has obtained a patent for XTRAX and is currently testing and certifying the device with Met Laboratories. Clear Skies Solar appears focused on launching XTRAX in the short term.

We expect our immediate capital expenditures, which we do not expect to exceed approximately $250,000, will be related to completing the Beta tests and preparations for the initial launch of XTRAX ®, which includes being “listed” by Underwriters Laboratories and approved by the Federal Communications Commission and the various cellular telephone carriers over whose networks XTRAX ® would transmit the data it collects, through our majority owned subsidiary, Carbon 612. Subject to industry and governmental approvals, and availability of funds to us and to C612, we expect to be able to have a commercial XTRAX ® product during 2010…

The decision to pair its solar installation service with the XTRAX energy monitoring system may prove to be a savvy one. On the one hand, Clear Skies provides the hardware of a solar power system, and on the other a proprietary software system to monitor the panels’ performance. Clear Skies eliminates the need for solar customers to hire a different company to install compatible energy monitoring systems. Instead, they will install both, offering a convenience and savings that could prove to be a competitive edge. Also, if Clear Skies is offering customers the ability to monitor their solar panel performance with XTRAX, then I imagine the company must be pretty confident that their solar panels actually save energy and money.

Solar Installation Contracts

Clear Skies Solar has earned contracts to install solar power systems in the US (primarily in California and New Jersey), Greece and India. It expects to earn more contracts in the short term:

“With strong strategic allies and high level client relationships, we have developed a large outstanding backlog of proposals exceeding $100 million, much of which is in the sub-megawatt arena. These sub-megawatt projects should allow us to complete work more quickly and with a shorter development lead time, thus stabilizing our revenue generation.” — Ezra Green, CEO

Delivering on this promise, Clear Skies Solar announced on July 13 that it secured a contract with a New Jersey real estate developer that is expected to earn the company at least $20 million. The stock jumped 45% upon the announcement, but has since come down to $0.039.

Ezra Green, CEO

The CEO of Clear Skies Solar is Ezra Green. Green has worked in the renewable energy industry for seven years and previously worked in construction for 25 years, including when he “led TAL Design & Construction to top rankings for excellence and customer satisfaction in The Franklin Report,” according to his Forbes profile.

News & Social Media

Clear Skies Solar has garnered positive press throughout communities where its solar panels have been installed. Amusingly, the Long Island Business Times tells the story of how CEO Ezra Green once randomly met a television producer at a Los Angeles lunch spot and subsequently landed Clear Skies an opportunity as a television series consultant and installer of solar panels for Los Angeles celebrities on the show “Eco Zone.”

Furthermore, Clear Skies Solar is making a noteworthy attempt at engaging with prospective customers, investors and the public via online social media. Upon searching, I discovered Clear Skies has active accounts on YouTube (with two videos uploaded), Twitter and Facebook.

Conclusion

Given Clear Skies Solar’s growth prospects, its experienced team and its innovative product offerings, I believe the company is poised to grow substantially. Clear Skies Solar has in the past year expanded its domestic and global reach while reducing its debt, and I expect this trend to continue.

Why the low stock price? Many commenters on Joe Noel’s latest update on Clear Skies attribute the low stock price to investor hesitation over the company’s relatively weak 2009 performance, and to day traders who buy and sell large quantities of stock after news announcements. As Clear Skies Solar moves forward, I expect that more investors will see the value in this company and help it to grow. Count me in.

Clear Skies Solar (CKSH) Stock Chart

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The company is based in Merrimack, New Hampshire but operates throughout the world, with a strong sales presence throughout Asia.

GT Solar’s Purpose and Mission

GT Solar International, Inc. is a leading global provider of polysilicon production technology, crystalline ingot growth systems and related manufacturing services for the solar industry.

Our vision for innovation is to provide sustainable value to customers across the PV manufacturing chain by delivering products and services that lower the cost of photovoltaic manufacturing, and accelerate the adoption of renewable solar energy systems around the world. — 2010 Annual Report (PDF)

Various solar companies, most of them Chinese, look to GT Solar to provide the machinery necessary to make solar panels.

Recently, the company sold its thousandth DSS450 system, a furnace used for the production of the solar wafers used to make solar cells. From Q3 to Q4 2009, they doubled their output of these furnaces to meet customer commitments. I am hoping this fast growth in production is an indication of the scalability of GT Solar’s business.

Because every company looking to get into the solar industry needs machinery to produce panels and components, it stands to reason that GT Solar is in a good position to grow — that is, assuming the demand for solar panels continues to grow as well.

GT Solar’s success depends on the growth of the solar sector. My underlying assumption as an aspiring solar stock investor is that solar will play a significant role in the global transition to clean energy. The U.S. Department of Energy cites a 20% annual growth rate in the US market for solar energy since the late 1990s. Globally, it has grown 41% per year since 2001.

GT Solar Competitors

Although there are no publicly-traded companies competing with GT Solar’s polysilicon business, GT Solar is not without competitors in the photovoltaics part of its business.

Publicly-traded GT Solar competitors:

1. Applied Materials (AMAT) makes silicon chips primarily for computer companies, but it entered the solar silicon market in 2006. Its stock closed at $12.53 on July 14.
2. Spire (SPIR) boasts that “80% of the solar modules made today use some of our equipment.” Its stock closed at $3.75 on July 14.

GT Solar closed at $6.07 on Wednesday, July 14, down 6 cents from Monday’s close. My plan for this stock is to hold it for some time and see what happens.

GT Solar (SOLR) Stock Chart

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Applied Materials (AMAT) Stock Chart

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Spire (SPIR) Stock Chart

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