Trefis Top 5 – June 1 Insights (FSLR, MT, DUK, ANF, ANR)
In Wednesday’s wrap, we look at Germany’s decision to phase out nuclear power and the impact it will have on First Solar (NASDAQ:FSLR), which earns a sizable portion of its business there. We also break down ArcelorMittal’s (NYSE:MT) four sources of value and discuss the key drivers behind these. Duke Energy (NYSE:DUK) is exploring low carbon projects that could be environmentally friendly – and profitable. Abercrombie & Fitch (NYSE:ANF) Q1 results show a pick in up in momentum over weak sales figures last year, and we also initiate coverage of Alpha Natural Resources (NYSE:ANR) with a price estimate of $54.
Germany’s Decision to Shun Nuclear Could be Boon for First Solar
First Solar (NASDAQ:FSLR) has a reason to rejoice with the German government announcing that it will phase out all its nuclear power plants by the year 2022. [1] The resulting deficit in power will be addressed by expanding the use of renewable sources. First Solar has been the single largest provider of solar modules to Germany in the recent past and should be able to capitalize its strong presence in the German market to make the most of this opportunity. First Solar is one of the biggest players in the competitive solar components industry engaged in the manufacturing and sale of solar modules with an advanced thin film semiconductor technology, and it competes with other solar industry players like SunPower (NASDAQ:SPWRA), Suntech Power (NYSE:STP), LDK Solar (NYSE:LDK) and Yingli Green Energy Holding Com (NYSE:YGE).
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- Why Is The Hydrogen Theme Underperforming This Year?
- Why This Renewables Theme Is Underperforming In A Strong Market
Top 4 Sources of Value for ArcelorMittal
ArcelorMittal (NYSE:MT) is by far the largest producer of steel in the world. Formed in 2006 by the merger of two steel giants Arcelor and Mittal, the company produces over 100 million metric tons of steel annually and has operations in 20 countries on four continents. To give an idea of the company’s size, its steel output in recent years has been higher than the combined output of all three of its biggest competitors – BaoSteel, POSCO (NYSE:PKX) and Nippon Steel. ArcelorMittal also competes with other international steel companies like Tata Steel and U.S. Steel (NYSE:X).
Low Carbon Technology Projects Can Provide Upside to Duke Energy
Duke Energy (NYSE:DUK) is one of the largest electric utilities in the U.S. along with American Electric Power Company (NYSE:AEP), Exelon Energy Corp, Allegheny Energy (NYSE:AYE) and Progress Energy (NYSE:PGN). Duke Energy has approximately 35,000 megawatts of electric generating capacity in the Carolinas and the Midwest, as well as natural gas distribution services in Ohio and Kentucky.
Abercrombie & Fitch Picks Up a Little Momentum
Abercrombie & Fitch (NYSE:ANF) recently reported first quarter results, in which net sales increased 22% over the same period last year, to $837 million. Internet sales increased 32% vs. Q1 2010. Total comparable store sales grew 10%. Breaking this number down further, comparable store sales for Abercrombie & Fitch stores increasing 8%, while those for Hollister stores grew 11%. Operating margin for the company increased by 7% year-over-year. [2]
Coverage Launch Alpha Natural Resources: $54 Trefis Price Estimate
Alpha Natural Resources (NYSE:ANR) is America’s third largest coal producer competing with the likes of Peabody Energy (NYSE:BTU), Arch Coal (NYSE:ACI) and CONSOL (NYSE:CNX) Energy. Alpha Natural Resources has production capacity of nearly 100 million tons of steam and metallurgical coal. The size and quality of its coal reserves enable it to provide top quality products to a wide range of customers including thermal coal for power generating utilities, custom blend industrial coal for industrial customers and high quality metallurgical coal for use in the production of steel. The company produces, processes and sells steam and metallurgical coal from more than 60 active mines and 14 coal preparation plants located throughout Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming. From 2005 to 2009, the company’s revenues increased from $1.6 billion to nearly $2.5 billion, an annual growth rate of over 11%.
Notes:
- Germany Will Close Nuclear Plants by 2022, The New York Times, May 30 2011 [↩]
- Abercrombie & Fitch reports first quarter 2011 results [↩]