MEMC Electronic Materials, Inc. (WFR)

MEMC Electronics can't seem to keep momentum going. As a supplier of wafers, primarily to the solar industry it not only rides up and down with their sentiment, it has also had some large hits from management turnover and production issues. MEMC recently announced a loss that surprised analysts. At the same time it announced buying a privately held solar panel installer SunEdison. In many cases if you sell a sub-component, you don't want to also be in the business of selling/bidding on the final product as well...something about competing with your own subcomponent customers doesn't go over very well. I don't think this will be a serious issue in this industry. SunEdison has done well as an installer and getting components from MEMC at their cost as a division of MEMC should help them. It will also give them broader reach and possibly expand their customer base. Since MEMC has a good supply of cash, I consider the SunEdison deal to be positive. As far as the loss this quarter, again due to their cash position and the loss being partially caused by a shift in manufacturing locations and the associated costs and that solar power is "catching" on, albeit more slowly than expected a few years ago, that MEMC will bounce back. This pick may take a while to mature, but I like the 10% discount I received from the market today. Low growth, but profit margins at 17% and operating margins at 25%, P/B of 1.56, minimal debt although it did take on some with the SunEdison purchase when that is finalized.