A Bright Star

05/13/2005 12:00 am EST


Gregory Spear

Editor and President, The Spear Report

"Most ‘green’ companies – those involved in alternative energy – are small cap outfits and are vulnerable to overall market weakness in the small-caps," notes Gregory Spear. "However, here is one standout company in the solar cell arena that we want to call to your attention."

"DayStar Technologies (DSTI NASDAQ), a manufacturer of a new type of low-cost solar cell, is an unusual company in many respects. DayStar managed to launch a successful IPO in March of 2004 on the strength of a patented thin-film, silicon-free, copper-indium-gallium-selenide (CIGS) solar cell called LightFoil. The innovative product consists of high efficiency CIGS solar cells deposited on very thin, but very strong titanium foil. DayStar believes the unique combination of its CIGS solar cell design coupled with inexpensive manufacturing processes derived from computer component manufacturing will lead to the ubiquitous deployment of solar applications worldwide, by removing cost barriers.

"The New York State Energy Research and Development Authority wooed the company from its California location to upstate NY with an award of $1 million to assist them in their commercialization efforts. The award comes on the heels of recently approved legislation in New York, mandating that by the year 2013 at least 25% of the electricity sold to consumers in New York State will be generated from renewable resources such as solar, wind and geothermal.

"Recent interest in the company's technology is not only coming from its prospects as a supplement to utility-generated power. The immediate demand for their ‘LightFoil’ product arises from military and homeland defense applications. These include high altitude airships, winged unmanned aerial vehicles and orbital applications for next generation satellite craft. The product meets the low weight, high power, and form flexibility metrics required by onboard power generation systems for these weight- sensitive applications. Further applications will come from needs for remote battlefield power. Commercial OEM uses for consumer devices and gee whiz products such as solar clothing are also in the works.

"Further, the silicon-based solar cell industry is currently experiencing tremendous supply problems because the silicon substrate used in making traditional cells is sold out at least until 2007. As DayStar's photovoltaic foil products do not depend on silicon feedstock material, the company expects to be able to sell all the photovoltaic foil that it is capable of manufacturing over the next several years. DayStar is still in the developmental stage, with a market cap of less than $50 million. This is not out of line for a "story stock" with good potential. The company has about $6 million in cash on the books and we do expect shareholder dilution as the company issues shares to warrant holders. Accordingly, we anticipate a great deal of volatility in the share price over the next year. At this time, however, DayStar is one of the brightest of tiny stars in our investment universe."

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