Green on all Fronts

A little bit of energy and energy-related news:

• WESCO, which is traditionally associated with the industrial space or large projects, recently worked with a contractor in California on a large residential project that used solar.  According to Robert Lopez, Sacramento, CA branch manager for WESCO in a press release from PV Powered, “We are starting to see a new trend in the Solar Industry.  Electrical Contractors are looking to work with their preferred vendors on products and services for the solar market, and the value of our project management and design/assist services make us of tremendous value to our customers.” While California is the leader in solar projects, with 40% of U.S. solar production generating in California, solar continues to generate some opportunities for electrical distributors, and will probably continue to do so as long as there are state and federal incentives.
• And speaking of WESCO, KeyBanc initiated analyst coverage.  While we don’t recommend or comment on stock recommendations, it was interesting to see that the analyst commented that “as one of the top electrical distributors in the world will enable it to ultimately achieve operating margins higher than its most direct peers as a result of the Company’s scale advantages, differentiated model and access to high-growth markets.” It was referenced that WESCO’s gross margin was 19.3%. As many distributors would disagree that WESCO’s gross margins are “higher”. 
• On the lighting front, Cree’s latest technological success will increase the usage of LEDs for outdoor lighting. Look for manufacturers to adopt this new line (or Cree Lighting Solutions to develop its own outdoor lighting line).  Could it be possible that LEDs and solar will someday be integrated into a common fixture?
• And on the manufacturer side, we’ve heard that Leviton and Philips / Advance are, in our words, “refining / enhancing” their sales organizations, trying to gain efficiencies, increased productivity and greater end-user traction.

While there is much uncertainty about the beginning of 2010, most people we speak with view energy efficiency / green as representing growth potential. As the above shows, diversification (solar), focus (manufacturer changes) and new product introductions (LEDs) will continue to generate opportunities.