ENER Comes Into Its Own

As if anyone didn't already know, First Solar (FSLR Quote) lately has been one of the hottest stocks on the planet, tacking on 13% this year following a blistering 785% run in 2007. Today's impressive first-quarter earnings report only justifies First Solar's status as one of the true 800-pound gorillas in the momentum game.

One factor in First Solar's success its production of thin-film solar panels, which don't require polysilicon, commonly known as the stuff MEMC Electronic Materials (WFR Quote) makes. Polysilicon, a key component in the manufacture of semiconductors and solar panels, remains in short supply due to rampantly growing demand for solar panels as well as industry production problems.

However, there's another quality thin-film player out there beyond First Solar, and while it hasn't been the stock market monster First Solar has been, it also isn't trading at more than 20 times expected full-year sales.

That player is Energy Conversion Devices (ENER Quote), which is a pick in the TheStreet.com Breakout Stocks newsletter, and best characterized as the former redheaded stepchild of the solar industry before getting its act together in recent quarters with improving sales and cost controls.

Like First Solar's, ECD's solar panels do not use polysilicon and so the company isn't feeling the heat of tight polysilicon supplies. ECD's panels are lightweight and highly durable, which has given the company a strong position in the building materials market, since the panels don't require any type of structural reinforcements. This reduces the cost and complexity of installation for customers, who can just pile the panels on roofs to generate electricity.

ECD's financial metrics are also improving, with gross margins steadily rising, and sales growth of 106% over the first two quarters of the 2008 fiscal year, which ends in June. Plus, the company aims to hit sustainable profitability in the June quarter, and the company has an element of safety in the fact that 100% of the fiscal 2008 pipeline for this fiscal year is full. And looking to next year, 80% is booked up.