The international push for alternative energy shined a positive light on Dawn Alston Paige’s portfolio. Paige, senior vice president and co-founder of Durham, North Carolina-based Piedmont Investment Advisors, made a prescient call that shares of MEMC Electronic Materials (WFR), would climb from $38 to $50 within 12 to 18 months — a 37% gain (“Defensive Moves,” Moneywise, December 2006). Just shy of a full year, we noticed that shares of the St. Peters, Missouri-based company exceeded Paige’s target, closing at $61 in early August — a 60% increase.
Investors in MEMC, whose products are used in solar panels, can thank the rising cost of oil. “As oil prices approach $80 per barrel, there’s strong solar industry demand for alternative energy sources,” says Paige. The growing popularity of alternative energy has led MEMC to capitalize on the trend by expanding its production of polysilicon solar wafers. Polysilicon is a synthetic material that serves as the building block for solar wafers and is in high demand as people continue to look for alternatives to fossil fuels. The company’s management has shifted focus toward solar-related products and expects increased production to account for 50% of revenues by 2010, compared with only 20% in 2006, according to Paige. This year management expects to grow earnings 60% over last year.
Paige believes that the value of MEMC stock will remain strong, and she’s set a new 12- to 18-month price target of $85. Overall, Paige’s portfolio is up 8.3% compared with a 10.5% rise in the S&P 500 over the same time period. Paige says each of her picks remains a solid long-term investment despite the market’s recently volatility. We’ll take a look at her full portfolio in December.