Minyanville's Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. Here he answers a reader's burning question about "green" stocks. For more original thought, visit www.minyanville.com.

Professor Udall,

Do you have any opinions on Zoltek Companies, Inc. (NASDAQ: ZOLT)? My wife wants me to buy everything "green". Her last "green" company idea was General Electric (NYSE: GE). I know, right? I bought a little just to quiet the noise level. I'm into a little SunPower (NASDAQ: SPWR) and Evergreen Solar (NASDAQ: ESLR). Does Zoltek have legs?

Thanks,

Minyan L.

Minyan L.,

First, that's hysterical. Second, a word of caution: Going all green, or all of any one thing, is something I'd never advocate. If you do, you do so at your own risk, as nothing in the market is ever as obvious as it seems, especially when it seems totally obvious.

As for Zoltek, I've always had a hard time getting my arms around the volatility that is this company. I invest in and trade many stocks with high to very high volatility, but the way Zoltek trades has never struck a cord with me.

Additionally, with respect to high beta, I tend to like companies with cash-rich (preferably net cash) balance sheets and volatile Zoltek isn't sporting that big green stockpile.

In my opinion, the highest quality solar plays are Cypress Semiconductor (NYSE: CY)/SunPower, Trina Solar (NYSE: TSL) and Suntech (NYSE: STP). Evergreen Solar is my flyer as it will need capital, but I believe it's for viable reasons.

I currently favor solar over wind from a longer-term thematic standpoint, but that doesn't mean I don't see the wind thesis and think longingly about the American Superconductor (NASDAQ: AMSC) shares I owned not too many months ago.

If you're looking specifically for wind plays, you may want to investigate Thomas & Betts (NYSE: TNB). It's a well valued stock that's trading way off highs.

Sean

Position in TSL, ESLR

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Proposed Rate Freeze to Reduce Foreclosures
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Last week we spoke about data storage giant EMC Corp. (NYSE:EMC) being way undervalued, based on its core business plus its holding in VMWare (NYSE:VMW). Today, I'd like to focus on another stock that appears to be trading at a big discount to actual value.

Cypress Semiconductor (NYSE:CY), a chip company, trades with a market cap of about $6.3 billion, and has shown decent revenue growth. It holds a 53% share in Sunpower Corp. (NASDAQ:SPWR), which makes solar panels and cells. Sunpower has been flying ever since its IPO, and currently trades at a market cap of $13.2 billion. This makes Cypress's share in Sunpower around $6.9 billion. I am aware that in situations like this the parent company will rarely trade based on the full value of its holdings, but this is a bit silly. It's not like Cypress's core business stinks.

"Assuming we do not encounter any major macroeconomic disruptions, we are well-positioned to sustain substantial revenue gains into 2008," Cypress CEO T. J. Rodgers said. This doesn't sound like a business that is being valued at negative $600 million (approx.).

Yesterday, Credit Suisse analyst John Pitzer noted that Cypress alone is worth somewhere around $2 billion. In a perfect world that should give Cypress a market cap near $9 billion. Again, I understand that we don't live in a perfect world, but at a 40% discount, Cypress looks like a nice, cheap play.

Disclosure: Writer holds stock in EMC. Writer has clients who own CY, but does not own it personally. He holds no position in any other stock mentioned as of 11/8/07.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.

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In July, Cypress Semiconductor Corp. (NYSE: CY) posted record 2Q 2007 revenue. At $372.8 million for the quarter, up 8.7% from 1Q 2007, 2Q revenue surpassed the previous record revenue set in 4Q 2000 at the height of the dot-com boom. (Ah, those were the days.) Diluted EPS were $2.29 as compared with 1Q 2007 diluted EPS of a loss of $0.01. But let's examine that EPS figure. During 2Q, Cypress sold 7.5 million shares of its wholly owned subsidiary Sun Power. Cypress still has a $3 billion stake in Sun Power. Excluding the proceeds from this stock sale, diluted EPS is $0.16, much less but still much better than a loss. CEO T. J. Rodgers bragged on these results, noting that Cypress Semiconductor has survived when 47 of its competitors since 1982 have not.

Rodgers stated that demand for semiconductor products increased for the seventh quarter in a row, and he sees no slow down. Cypress is expanding its line of proprietary products, including PSoC (programmable solution on chip) models that offer touch-screen capabilities for cell phones, video gaming, and point-of-sale registers. Touch-screen capability is the wave of the future, as is HB-LED (high brightness light emitting diode) for all types of HD TVs, cell phones, and lighting products. Cypress forecasts HB-LED to be a $10 billion market annually within the next three years, much of which will rely on Cypress products. Cypress is also in the forefront of mobile communication devices, offering a peripheral handset controller that downloads music to cell phones ten times faster than previously. Cypress is also developing next generation high-speed holographic (3D) data storage systems.

The biggest gainer for Cypress is its Sun Power division, accounting for just under half of the company's 2Q revenues. Sun Power offers sun-tracking solar panels that are 30% more efficient than standard fixed-mounted systems. These panels are already in place in Roseville, California, a solar-powered neighborhood. Sun Power has been marketing its solar power products to a wider variety of customers. In 2Q it added Nellis AFB in Las Vegas as a 15 solar megawatt customer. Sun Power has also entered the retail sector, supplying solar power to seven Wal-Mart stores in California, Tiffiny's in New York City, 26 Macy's stores in California, and Coors Stadium, home of the Colorado Rockies professional baseball team. Ideally, Cypress via Sun Power would like to triple its customer base within the next year.

Cypress stock is up 50% for the year, opening the year trading at $16.80, and closing Friday at $24.38. Check this one out while its still a comparative bargain.

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• Lehman cuts Micron Technology Inc's (NYSE: MU) estimates and sees losses for the next three quarters. The increase in demand for memory chips due to Microsoft Corporation's (NASDAQ: MSFT) Vista demanding more memory is not happening.
• Pacific Crest Securities wrote second quarter chip demand is underwhelming, with notebooks and the Nintendo (OTC: NTDOY) Wii the only bright spots.
• J.P. Morgan wrote consensus expectations for both the second quarter and all of 2007 are too high and is trimming estimates, The more significant earnings misses could come from Advanced Micro Devices Inc (NYSE: AMD), Cypress Semiconductor Corporation (NYSE: CY), Intel Corporation (NASDAQ: INTC) and On Semiconductor Corporation (NASDAQ: ONNN); with smaller cuts for Texas Instrments Inc (NYSE: TXN), Broadcom Corporation (NASDAQ: BRCM), Altera Corporation (NASDAQ: ALTR), Xilinx Inc (NASDAQ: XLNX) and Fairchild Semiconductor International (NYSE: FCS).

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Companies start to believe their own PR hype. Investors push a stock past logical limits. A company seems about to break down or break out. These are just a few things that can signal a stock with attitude. And... that attitude can be good or bad for the stock price, since attitude always catches up with reality. At least on Wall Street, that is.

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It looks like Intel (NASDAQ:INTC) has achieved another breakthrough in the semiconductor sector.

According to a report in The New York Times, a new microprocessor that Intel plans to introduce uses a new insulator that leaks less current near transistors, reducing power consumption, while at the same time enabling improved processing speed/performance.

They're called 45-nanometer generation chips -- a project more than ten years in the making -- and it will help Intel reassert itself against competitors in the low-power chip segment. In its pursuit of speed, Intel had fallen behind competitors in that dimension of chips, who were shifting to low-power alternatives.

Intel's here-to-fore emphasis on processing speed is understandable; it could be argued that, along with Microsoft's (NASDAQ:MSFT) Windows breakthrough, Intel's semiconductor advances are the two engines that helped propel the impressive increases in worker productivity that have characterized the Digital Age since the early 1990s.

Further, recently Intel has been pressured by lower-cost competitors Advanced Micro Devices (NYSE:AMD), Texas Instruments (NYSE:TXN), and Samsung Electronics (OTC:SSNLF), with the latter grabbing the No.1 flash memory spot from Intel.

Wall Street has duly noted these inroads by Intel's competitors, and Intel's stock -- while it has not plummeted, has languished between $17 and $23 over the past year, after a sharp down-off from $28 in late 2005. Intel's shares closed Friday at $20.53, down 7 cents.

However, if Intel's new 45-nanometer chips perform as well as the company hopes, Intel's stock may start racing ahead as well, along with the performance of PCs, laptops, and other digital devices.

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MOST NOTEWORTHY: Today's notable initiations include NetFlix (NFLX) and Diamond Foods (DMND):

• Bank of America started NetFlix Inc. (NASDAQ:NFLX) with a Sell rating and $24 target, as they expect increasing subscriber acquisition costs and decreasing average revenue per subscriber to be challenging for the long-term;
• Diamond Foods Inc. (NASDAQ:DMND) was initiated with a Buy rating and $23 target at Oppenheimer, as the firm believes Diamond Foods has a solid core business and sees healthy growth with the Emerald products division.

OTHER INITIATIONS:

• JB Hunt Transort Services Inc. (NASDAQ:JBHT) was initiated with a Hold rating at McDonald.
• Duke Energy Corp. Holding Co. (NYSE:DUK) was initiated with a Hold rating and $35 target at Deutsche Bank, citing valuation.
• JP Morgan initiated shares of International Coal Group Inc. (NYSE:ICO) with an Underweight rating, citing difficult business conditions for Central Appalachian coal miners.
• Rochdale initiated Cypress Semiconductor Inc. (NYSE:CY) with a Buy rating and $21 target; the firm believes new business, operating efficiencies and the SunPower (SPWR) investment will improve profitability in 2007.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

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To sell or not to sell? That has been the big question for the CEO of Cypress Semiconductor (NYSE: CY). During the past few weeks, it looked like the CEO wanted to sell out.

Well, he no longer wants to.

Of course, it was something shareholders did not want to hear. The stock price is down about 10% to $17.

Interestingly enough, the company also reported its third quarter results - which were strong. But it looks like there was a lot of buyout speculation baked into the stock.

The crown jewel of the company is SunPower, which is benefiting from the growth in solar power systems. In fact, Cypress is still considering alternatives for this asset. Perhaps a sale?

Maybe. Or maybe not.

Recently, there has been quite a few buyout rumors. But, as is the case with Cypress, these rumors are usually nothing more than rumors - which turn out to be fairly unhealthy for your portfolio.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

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Cypress Semiconductor's (NYSE: CY) stock price has been hot over the past couple weeks - going from $16 to $19.65 per share.

Well, the rumor is that Cypress is a possible buyout candidate. After all, private equity money has been rushing into the tech sector, as seen with deals like Freescale and Philips Semiconductors.

In fact, last week, Cypress announced it is looking at "strategic options" for its crown jewel; that is, the investment in SunPower (SPWR), which develops solar cells. The company has been growing at a torrid rate.

Cypress owns roughly 69% of SunPower, which has a market value of $1.8 billion. That translates into a value of $1.2 billion. As for Cypress, it has a market value of $2.7 billion.

In other words, Cypress may present an attractive "break-up" play for private equity investors.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

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