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Monday March 03, 2008
American Superconductor (AMSC): Power grid power play
The contributing editor to Stephen Leeb’s The Complete Investor, explains, “American Superconductor (NASDAQ: AMSC) is an energy tech leader that helps the electric grid to function better." Here, he looks at the latest addition to their "Fast Track" portfolio.” “American Superconductor designs and sells products geared to utilities, industrial companies, and wind energy developers. Its offers are designed to help these customers to generate and deliver electrical power more efficiently, cleanly, and reliably. 
“The company sells power converters to utilities and industrial customers. The point of these converters is to regulate voltage, thereby improving the performance of the electric grid – making it more efficient (and energy-conserving) as well as reliable. “The company is teaming up with the Department of Homeland Security as well as with Con Edison on a grid upgrade for New York City that would increase capacity and suppress power surges. “In 2007, beefing up this division, American Superconductor made two significant acquisitions. It bought Windtec, a company that specializes in wind energy – licensing proprietary wind turbine designs, training workers to maintain turbines, and supplying converter and control systems to wind farms. “This past year, Windtec has worked to boost its presence in China, and some sizable potential contracts in that country are likely to come through. “Somewhat ironically, the company’s Superconductor Wires, after which it is named, hasn’t yet been profitable – but we think the potential is enormous. The division makes high-temperature superconductor (HTS) wires used in power cables, bit motors, and even magnetically levitated trains. “These wires can carry around 150 times more power than traditional copper wires. Even more important, though, there is no almost no energy leakage. "While not yet turning a profit, American Superconductor s in good financial shape, with no debt and a lot of cash. Revenues have risen from $56 million in 2006 to around $100-$110 in 2007 and are expected to expand sharply in 2008. “About half of revenues are from abroad (though concentrated in a few customers), and the company recently formed a new division to meet rising demand from Asia. We see AMSC as a leading, if risky, play on wind energy and energy efficiency.” |
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“With oil hitting $100, and voters increasingly attuned in this political season to the need for clean and renewable fuels, the alternative energy industry is ripe for investment,” says