Every investor’s dream is to find a stock that could rise three-fold or more and to get long the name before it happens. Of course, we all know that finding these explosive stocks isn’t always an easy task. It takes a great deal of research to find the right stock in the right industry that is growing fast and has the potential to make such a large move.

One sector that I believe is ripe with three-fold potential gainers is the solar complex. Worldwide, the solar space is expected to grow by 25% every year for the foreseeable future. Some analysts think that solar power could account for 10% of the electricity generated in the U.S. by 2025.

The growth in the solar sector is still in the early innings of what should be a very long game. Investors who find the gems in this sector have the potential to be awarded with large gains.

Recently, we wrote about solar stocks with great potential to make investors a lot of money, including Trina Solar (TSL) and Canadian Solar (CSIQ).

Now here are five solar stocks that could go up three-fold by 2010.

Hoku Scientific (HOKU): Hoku Scientific is a U.S.-based polysilicon provider. The company recently reported a profit of $646,000 for the first quarter, vs. a loss for the same period a year ago. The company said it’s on track to finish the construction of its new polysilicon facility in Idaho and begin operations of the plant in the first half of 2009.

However, the stock has been hit with downgrades since Hoku announced that it plans to sell shares to raise $54 million to build the new plant. Consider taking advantage of the sharp drop created by the recent downgrades and look to add this stock.

The potential for this company is huge. The firm recently announced it had partnered with world-leading solar company Suntech Power Holdings (STP) for the installation of a 254-kilowatt PV solar power system for a large warehouse and distribution center. The stock has a gigantic 18% of the float sold short and a very small number of shares available for trading -- only 15 million shares. If this company can continue on the right track, the shorts will be scrambling to cover at much higher prices.

LDK Solar (LDK): LDK Solar is a China-based solar company that manufactures and sells of multicrystalline solar wafers to manufactures of solar cells and solar modules. This company is quickly becoming one of the world’s largest wafer solar manufactures. LDK Solar recently forecasted second-quarter revenues of $278 million to $288 million, which is well ahead of Wall Street estimates of $252 million, and the company said revenues should come in between $1.08 billion to $1.18 billion, vs. estimates of $1.08 billion.

Gabelli & Company thinks the stock can trade up to $68 by 2010 due to its competitive cost structure, margin expansion potential, scalability and internal polysilicon plant strength. The stock trades at forward P/E ratio of only 8. Use the weakness created by the plunging Chinese stock market to pick up shares of this future leader on the cheap.

GT Solar International (SOLR): GT Solar International is a New Hampshire-based capital equipment maker for some of the world’s leading solar manufactures, such as LDK Solar, Yingli Green Energy (YGE) and Trina Solar (TSL). The company just came public on Thursday and raised $500 million, the biggest alternative energy IPO of the year. The stock debuted in the middle of its pricing range of $15.50 to $17.50.

Revenues for fiscal 2008 soared 306% to $244 million, vs. $60.1 million for 2007, and the company went from a 13-cent-per-share loss in 2007 to a 25-cent profit this year. GT Solar has a whopping $1.3 billion backlog and plans to use the money raised from the IPO to double the size of one of its facilities and hire an additional 80 employees. This stock could easily rise three-fold if the company continues to deliver strong results.

DayStar Technologies (DSTI): DayStar Technologies is a California-based development stage solar cell company. This solar firm has been criticized heavily for taking too long to develop and bring to market its copper indium gallium selenide “Thin Film” product. CIGS is a technology that uses a new semiconductor to produce thinner solar cells that are much easier to hide and reduce cost dramatically.

In the most-recent quarter, the firm reported a dramatic improvement in its results, with a net loss of $4.5 million, or 14 cents a share, vs. a net loss of $17.9 million, or $1.43 a share for the same quarter a year ago. DayStar still doesn’t make any revenues, but the company just leased a new building and plans to start production in the first quarter of 2009. The stock has 6.57% of the float sold short, with only 29 million shares available for trading. If this company can bring to market a successful CIGS product, the stock will explode.

Evergreen Solar (ESLR): Evergreen Solar is a U.S.-based company that develops, manufactures and markets solar power products enabled by its String Ribbon technology. The String Ribbon solar products are a low-cost wafer technology that uses less polysilicon than conventional processes.

The company recently announced a huge $1.2 billion sales contract with IBC Solar. Despite some big contract wins, the company continues to post earnings losses as it spends heavily on R&D and raises capital to fund production expansion. However, that’s exactly what a young company with a ton of potential should do during the initial stages of capacity ramp-up.

The stock has a very large 26% of the float sold short and around 105 million shares available for trading. The stock consistently trades in a channel between the prices of $8 and $12. Look to buy this stock at the lower end of the range and get ready for a three-fold land when it breaks above $12 with volume. The short-squeeze potential on this name is huge.

At the time of publication, James Altucher had no positions in stocks mentioned.


A note from James Altucher:

Every weekend I send an email to Jim Cramer and several hedge fund managers about the most interesting portfolios posted on Stockpickr that week. Usually those portfolios not only list stocks according to a theme but also offer significant analysis as to why the stocks are cheap.

Here are some examples:

Stocks related to drilling the Marcellus Shale

MLPS with yields above 7%

Microcaps trading for less than tangible book

Stocks that do well after Hurricanes

Here's the challenge: Build a portfolio at Stockpickr.com with great analysis, and send me the link. Each great portfolio (with analysis) will get posted on TheStreet.com with your byline (as a "Stockpickr Guest Columnist") and will be included in my email I send to Jim and the other
hedge fund managers on my list.


Publishd July 28, 2008