There's a BOGO Sale on GT Advanced Technologies

The world's top value investors love it when their best stocks ideas are selling at bargain-basement prices. For those investors, companies offering fire-sale prices become no-brainer buys. So regular investors like you and me would do well to emulate the masters and look at companies offering a "buy one-get one" sale on their stocks.

Like most names in the solar industry, polysilicon equipment maker GT Advanced Technologies (NASDAQ: GTAT) got a bit of a bounce from China's announcement it was doling out $1 billion to Jinko Solar (JKS -0.46%) amid calls for the industry to consolidate. If the government was picking winners and losers, the glut that's plagued the industry for well over a year may finally abate allowing prices to rise at last.

Still you'll want to do more due diligence before buying in to see if this is a chance to pick up a quality stock at a severe discount.

GT Advanced Technologies snapshot

Source: FinViz.com. N/A = not available; GT Advanced Technologies doesn't pay a dividend.

Let's just make sure there's nothing more seriously wrong with it before you go and plug it into your portfolio.

Getting burned
Unfortunately, GT Advanced doesn't have many levers it can pull to change the course the solar industry is following. I didn't expect the small gains it realized following the Jinko statement to last, and it's given back most of them as the outlook for solar continues to decline. The solar furnace maker slashed its workforce by 25% in October, forecast losses in the fourth quarter, predicted a lean but perhaps profitable 2013, and anticipated that customers would have difficulty in accessing capital markets. Now it says there probably won't be any uptick in the business till 2014 at the earliest, so it will be idling a manufacturing plant for at least half the year while it pares a few more jobs.

The market researchers at iSuppli do anticipate that polysilicon prices will finally bottom this year, and analysts at Maxim Group believe they already have, as prices actually gained 3.5% since the start of the year. But that's only part of the equation, because until solar power reaches unsubsidized parity with traditional electricity sources, the industry won't truly recover, and right now it's nowhere near there.

Scaling up
It's partly why First Solar (FSLR 0.43%) is no longer competing head-to-head against module manufacturers such as ReneSola and Suntech Power, but instead is forging ahead as a design-build construction firm for utility-scale solar power plants. Its systems segment has become the lead driver for growth for the solar shop, enjoying a 21% increase in revenues last quarter even as its components division witnessed a near 50% haircut in sales. Systems make up two-thirds of its total revenues now, but with traditional engineering giants like Fluor moving into the space and winning contracts based on their access to financing and experience, First Solar's transition won't be smooth.

Like its industry peer, GT has a backup plan as well making sapphires for the LED industry. It also believes sapphires could become a more cost-effective alternative to other materials being used, such as Corning's scratch-resistant Gorilla Glass.

Seeing red
Analysts at France's Yole Developpement agree noting all major cell-phone OEMs are currently investigating their potential, but they also point out there's substantial overcapacity in the sapphire industry that will affect the profitability and viability of many players. They see rationalization and consolidation coming, and that could explain why GT's rival Rubicon Technology (RBCN -15.12%) just secured a $25 million revolving credit facility. It currently has no debt, but getting financing in place now ahead of a collapse is smart thinking.

While I wouldn't bet on GT's recovery anytime soon, I do believe it will be a survivor, and if the solar and sapphire industries turn, it should capture a lot of the growth potential. But until then, which seems like 2014 at the earliest, an investment here could be dead money. Still, trying to time an entry into the stock is difficult and with shares trading at just three times earnings and 10 times estimates, GT Advanced Technologies may just be cheap enough to take a stand if you've got the patience to wait.