A healthy dose of skepticism is always good, especially in a company growing quickly with one customer. But American Superconductor has done a pretty good job of diversifying its business lately; it just hasn't hit the books yet.
The wind is still blowing
The wind market as a whole hasn't performed very well this year as competition increases. Wind turbines have struggled for General Electric
But a lot of this competition is using American Superconductor's technology as well. In presentations, the company highlights 12 customers who will become major buyers, and most of those customers are just starting to ramp up production. This will diversify American Superconductor's customer base for wind and keep it from relying too much on Sinovel.
And there is more than wind for American Superconductor. In October, management announced the SolarTie Grid Interconnection Solution, expanding into the solar business. Then last week, the company announced an order for its D-VAR STATCOM reactive compensation solution.
And don't forget about superconductors. Sales aren't a big component yet, but a recent order for 3 million meters of superconducting wire is a pretty good start for a business with high potential.
No doubt there are many unknowns for American Superconductor, but the company has more going for it than just orders from Sinovel. And although its dependence on Sinovel is a risk, sometimes going against conventional wisdom has its advantages. This could be one of those times for company investors.
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Fool contributor Travis Hoium owns shares of American Superconductor. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his Motley Fool CAPS picks at TMFFlushDraw.
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