This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

5 Smart Grid Stock Keys: Washout Doesn't Mean Breakout

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

But here's the flip side ...

2. Shoot the lights out with an Echelon and forget about the boring legacy meters

Echelon doesn't have the legacy core metering revenue of an Itron or Elster, and it's embarked on an ambitious plan to ride the emerging market trend by selling metering components like chips and subsystems in markets like China and Brazil.

China is a market where pricing is beyond competitive -- metering companies like Itron have said you have to price so cheaply you can't make money. In Brazil, it's tough to break into the market without the right partner, though Itron and Elster are already active in Latin America. These factors are behind Echelon's approach to gain traction in these key emerging markets by just taking a piece of the action as opposed to enter as a metering company.

For investors concerned about where growth comes from next year after the last of the stimulus-funded projects in the U.S. ends, the major market to look to is Europe. But given the macroeconomic concerns there, European smart grid deployment could be derailed or in the least delayed.

Echelon has chosen a transformative strategy that places it further from the European question but far out on the risk spectrum -- selling chips in China and sub-assemblies in Brazil. If it works, that's a lot of upside to realize, but there are still many unknowns.

At what cost will Echelon gain market share? In other words, how will pricing play out in these markets?

It's transformation versus the incremental growth play of a "boring" company like Itron or Elster, and the transformation could take a few years.

3. If things are looking up for smart grid, where is the Silver Springs Networks IPO already?

The IPO of privately backed smart grid company Silver Springs Networks has been in the hopper for what seems like forever now, and the fact that it's still in the pipeline is a sign that sentiment for smart grid stocks isn't truly optimistic just yet.

There are general market reasons for the IPO delay: Capital markets appetite for IPOs and for alternative energy isn't strong right now and Silver Springs, specifically, may want to wait it out until it can get the valuation it believes its business deserves.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs