Not Another Solar-Energy IPO

The world needs another publicly traded solar-energy company as much as it needs another Starbucks in a suburban shopping mall, or another overpaid New York Yankees ballplayer.

To be fair, yesterday's filing to take Real Goods Solar public is somewhat unusual. The company isn't a major manufacturer of photovoltaic panels. It hails from Colorado instead of China. Oh, and its parent is a company associated more with yoga mats and new-age CDs than with sucking juice from the sun.

Gaiam (Nasdaq: GAIA) is a lifestyle-media specialist. Its businesses include wellness clinics, yoga studios, and instructional programming. It's a yoga-fueled company that has more in common with soccer-mom magnet lululemon athletica (Nasdaq: LULU) than with the laundry list of Chinese solar-panel makers that have gone public in recent years.

However, Gaiam's green, Earth-focused philosophy makes offering solar residential integration through Real Goods Solar a logical move.

Real Goods isn't new to the game. The company has been around since 1978 and had brought solar energy to more than 30,000 homes. In other words, like Kermit the Frog, Real Goods was green before being green was cool.

For its part, though, Gaiam could have had better timing. It could have taken the subsidiary public a year or two ago, when consumers were eagerly buying solar-energy stocks.

Solar-energy plays such as First Solar (Nasdaq: FSLR), SunPower (Nasdaq: SPWR), and China's Suntech Power (NYSE: STP) were once all the rage. All three of those stocks more than doubled last year. However, most of the sector's key players have fallen sharply over the past two months.

The only related company to pull off an IPO so far this year, China's ReneSola (NYSE: SOL), has been a disappointment. The maker of solar-module components went public at $13 last week but has already shed more than 14% of its value.

The industry isn't any less vital, but the valuations had been getting out of whack, especially given the competitive landscape, with more well-funded players jumping into the fray.

Real Goods Solar won't necessarily be a falling star, though. It's serving a niche residential market that should sell well as a story stock. By the time the IPO hits the market, sentiment may have turned favorable again on the solar-energy industry. If so, Gaiam could become a compelling investment, too.

On its own, Gaiam is profitable and growing, with revenue climbing 24% year over year through the first nine months of 2007. If Real Goods is able to command a healthy market cap on its own, Gaiam's investment will also appreciate in value.

The moral of the story is to look beyond the dark clouds. They'll pass. How bright the sun -- and the solar-energy stocks -- will shine beyond that remains to be seen.