Hoku expands plans a bit, shares take a hit

While Amazon blasted off again, shorts again are having a party at the expense of Hawaii-based Hoku Scientific.

The Co announced its earnings report after market and was very forward-looking, as expected. In addition to major contracts with companies from China and Germany, Hoku reiterated its deal with Hawaiian Electric. Hoku also announced plans to increase the size of its polysilicon plant in Pocatello, Idaho.

Traders didn't feel the optimism, taking HOKU down as low as $10.05 in after hours. HOKU had closed the day up 12 cents to $11.27. Here's an exerpt from today's press release:

Dustin Shindo, chairman, president and chief executive officer of Hoku Scientific, said, "We couldn't be happier with the strides made in our polysilicon and solar businesses over the past several months. Without question, the most significant news is the signing of polysilicon supply agreements with Suntech and Solar-Fabrik. These contracts along with our contract with SANYO may result in aggregate payments to us of up to approximately $1.2 billion over ten years."

"Based on these agreements, we intend to increase the planned size of our polysilicon plant by up to 1,000 additional metric tons of annual capacity. We expect that the cost will be greater than $260 million, which was the estimated cost for a 2,000 metric ton per year polysilicon plant, but we have not yet determined an estimated cost. We intend to use the over $211 million in advance payments from our polysilicon agreements to contribute to the financing of the construction, subject to our achievement of various polysilicon production and quality milestones. We plan to cover the remaining construction costs through debt and/or the issuance of equity securities.

Revenues for the fiscal year ending March 31 of 2008 will be down, Shindo added, due to the pullout from solar module manufacturing. Estimates of $7-10 million were pared down to $3-6 million.

For Hoku bears, it's more of the same; optimism and talk. For Hoku bulls, confirmation that the wheels are spinning and Shindo is highly progressive — perhaps aggressive, as well.

When the short-term trading shakes out, will this be a buying opportunity for the bulls? HOKU is trading below $11 for the first time since July 5.

EdgarOnline: Hoku Scientific 8-K.

Disclaimer: Pupule Paul is a skosh long HOKU.

Hoku one of several stars in solar

Waiting.

Waiting more.

The wait continues. Waiting for Hoku Scientific (HOKU) to drop to $10, or $9, is not going well. After the reecnt run-up, HOKU seemed prime for a pullback. Instead, the PPS ran to nearly $13 before taking a much-needed breather today.

The stock traded down 5% to $12.01 today.

Still, the solar sector continues to scorch shorties. How many longs can truly say they knew this was coming? Sure, China is in major solar-energy development mode. One of Hoku's bigger contracts is with a Chinese company, naturally. The move by solar defies normal convention. Even Barron's writer Eric Savitz is dumbfounded.

Me? I just want a nice entry point. Heck, if a Hawaii company is going to go gangbusters in the market, I want to be in. Especially a Co run by a guy who played high school baseball in the islands. In fact, I covered prep baseball on the Big Island when Hoku CEO Dustin Shindo played for the Waiakea Warriors. I think Tommy Correa was the coach at the time.

Anyway, a toast to Hoku Scientific. A star in the making. I might have to pay up for a real star like Hoku.

Disclaimer: Pupule Paul has no position in HOKU.

Of celestial promise and potential: Hoku Scientific

It's the hottest Hawaii-based stock in years. Hoku Scientific is in position to reach the heavens in a scant two years.
Hoku Scientific (HOKU $11.13)
Chart
Grade: B-

The skinny: This Co, based out of Kapolei, Hawaii, has switched gears in the relatively recent past, but its tenacity in the face of doubters is impressive. The current PPS ($11.50) may have all of the good news baked in so this will be a better buy at $9. Then again, there could be more good news coming around the pike. Like Dendreon, this is a small cap that is a couple of years away from real fruition. Even its processing/manufacturing facility in Idaho won't be completed until 2009. Definitely not for the squeamish, but certainly worth watching closely.

X factor: Can Hoku Scientific survive and fulfill its contracts (non-binding) worth $1.2 billion? The daily trading action on this solar/polysilicon Co is so intense, the PPS leaped from $4.50 to $12.80 on news about the contracts. All in a two-week span of June.

Summary: As a side note, CEO Dustin Shindo, is a Waiakea High School graduate and former baseball player. In fact, much of the executive staff hails from the islands. For a local fan, it's easy to love this Co. As a stock, HOKU is not fundamentally sound — not yet, anyway. No young company that hasn't hit its proverbial sweet spot with revenues and margins is going to be a low-risk investment. The risk/reward, however, is clearly appetizing for small-cap lovers.