Monday, March 7, 2011

SatCon Technology Corporation (NASDAQ: SATC) Q2 2011 Price Target

Recent price: 3.71$
P/E Ratio: -
3 Months Target Price: 4.50$

Company Description
According to their IR website, Satcon is a leading provider of utility scale power solutions for the renewable energy market. Building on its history as a developer of sophisticated and precise power management and control equipment, Satcon develops innovative products that address the enormous demand for reliable, affordable and clean solutions for large commercial and utility scale applications. Satcon’s inverters are grid-tied and line interactive, enabling them to convert direct current (DC) power from solar arrays to alternating current (AC) power that is compatible with the utility voltage for export to the grid.

Satcon manufactures utility-grade solar PV inverters ranging from 30kW to 1MW. The company also sells a line of fuel cell inverters for systems ranging from 25kW to 2.4MW.

Confidence Margins
Strong resistance 5.51$ (+49%)
Light resistance 4.07$ (+10%)
Light support 3.18$ (-14%)
Strong support 2.87$ (-22%)

The company provided poor guidance on the conference call explaining results for the fourth quarter of 2010. This caused the stock to go sharply lower but there is a lot of upside left from a technical point of view. At current prices, this is a great entry point in acquiring a position in a company involved in an industry with great potential.

Entry strategy
For the cautious investor:
Buy the stock for 3.90$ or less.

For the risk-taking trader:
The June 2011 2.50$ call option contract seems to be the right position to take, they can be acquired for about 145$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 4.50$, or keep it until 5.30$ if you are more bullish in your own analysis. It is highly recommended to keep the position on check if it goes under the light support.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 4.75$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get deeper in the money.

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