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my end of year review of AMSC INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too. American Superconductor AMSC (market cap $1.32B) American Superconductor sells cryogenically cooled superconducting cables, power network management devices (D-VARs), and wind turbine designs. The most vivid analogy I've heard is that their cables do for electrical power what fiber optics did for electrical signals. The wind turbine and D-VARs have been the main revenue generators, but this year saw the initial very large order for cables. The cables were their original market but the other devices actually made the company profitable earlier because the cables and their manufacturing process too longer to develop. Some have concerns that the company relies too much on their largest customer, the China wind power market. Their cables can only be used in applications that allow them to be cryogenically cooled, so they may not replace overhead power lines, but underground ones, or within a building, or a ship is possible. They do have competitors, but I don't get the impression that any of them are close to the same balance of quality and productivity. I intend to HOLD because I think they are just beginning to gain profit traction. The introduction and sale of the cables can be a significant revenue generator. I haven't done the numerical analysis because their potential market is so huge and the technology is so new that I don't think I could create a credible math model. The numbers would look pretty but the underlying assumptions would be too speculative. I think the market has unfairly discounted them because of China, an unfamiliarity with the technology, and an underappreciation for the potential size of their cable business. DISCLOSURE LTBH since 2003 but the first shares were sold a while back. |
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