Clear Skies Solar, Inc.(fka CSKH)

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CSKH - Prepare for a Big Move Higher for These Shares

by Joe on July 7, 2011

Watch Clear Skies Solar (CSKH) Shares – Prepare for a Big Move Higher for These Shares

We want to call attention to a special situation at Clear Skies Solar, which trades under the symbol CSKH. We think this stock will move significantly higher over the short term as we are expecting the Company to report a huge June quarter as the Company’s business clearly is getting back on track.

At a less than $5 million current market capitalization the shares are trading at only about half of the sales we are expecting for the June quarter alone. Simply put, if this business is indeed back on track, the share price will respond immediately. Doing a bit of homework on this could pay off big time.

Here’s our rationale for buying the shares right away:

1) Business Back on Track – Last year Clear Skies Solar missed its business plan as financing in the solar industry dried up. The private financing that was supposed to come through for the Company did not and CSKH suffered an embarrassing fall. Over the past few months the situation has changed dramatically with strong financing now in place for most of the projects in the growing pipeline.

2) We are expecting a huge sales numbers for the June quarter with these revenues to be reported on the income statement between the June, September and December quarters as projects are completed and accepted by customers. The Company recently announced that it was starting the month of June off with approximately $8 million of sales for the year.

3) New Residential installation program going extremely well – The Company recently entered the market for installation of residential solar systems. CSKH also recently announced its residential backlog is now up to $2.3 million after just eight weeks of being in this business. We think these are very strong numbers that point to a lot of additional upcoming growth for the Company.

4) We are expecting the balance sheet to show additional improvement as of the end of the June quarter – Over the past year the management team has worked hard to retire the convertible debt. As of the end of the March quarter this debt balance was at only $36,000 and we think the balance will be even lower on the Q2 balance sheet. While the Company still has a couple million dollars of other liabilities on its balance sheet, a lot of this number has to do with payroll liabilities, customer advances and warranties. If you take the time to look at the balance sheet very closely I think you’ll notice it is in pretty good shape, especially if the Company begins to turn cash flow positive as of the June quarter, which we believe is very possible.

5) Current market valuation – As of the end of the March quarter there were only about 211 million shares outstanding, which means the total market capitalization of the Company is well less than $5 million. We do not expect this share count to climb in any meaningful manner, considering the vast majority of the convertible debt has already been converted to equity. If CSKH reports sales for the June quarter in the range of $8 million-$10 million, shares of CSKH will be trading at only approximately one half of June quarter sales. We believe this would be an absurdly low valuation. If the Company does report the June quarter sales we are expecting, we believe the shares will at least double, or more, overnight as this will point to a large probable increase in reported revenue for the September and December quarters.

6) Management’s recent statements have been very strong and we believe clearly point to what is occurring at the Company. There are not a lot of investors looking at the Company currently as management’s credibility has been severely damaged over the past 18 months – therefore, shares did not move on this news. Nevertheless, we believe their statements clearly indicate that they have turned this company around and that strong revenue growth and likely profitability are close at hand. If this is the case, these shares will move much higher.

Here’s what they have recently said in press releases – It’s worth reading.

On June 7 – “As the stream of good news continues, we have been receiving the first deliveries of products for our permitted installations. Growing the backlog of financeable projects with shorter closing cycles has proven successful. With our new model we feel we have hit on the sweet spot in the industry and for CSS but more importantly we have built a strong sustainable model that we believe will create the much needed steady cash flow,” – “We closed the month of May with approximately $7 million in sales for 2011, and we are starting June on a very good note while bringing that total to $8 million. The project installations are beginning which will start to relieve the cash flow issues of the past. Forecasting future sales has proven difficult with our old model but with our new model running well, we look forward to discussing Q3 & Q4 2011. As we start the execution of the contracts during Q2, we will maintain the flow of information as events occur as demonstrated over the past 5 months. Although having a sales backlog is important, we need to execute on these projects in order to regain shareholder confidence and that is happening now.

On May 26 – “As we close the month of May with more than $7 million in closed sales for 2011, we have shown our model is working….” And “We have been delivering this continuous stream of good news in order for our shareholders to recognize that we have made serious and effective changes to our sales and operations model.”

On May 24 – “This brings our residential backlog to 73 homes exceeding $2.3 million within just 8 weeks of launching. Those are successful numbers for such a short period of time for a brand new program”

Joe Noel
We have no disclosures on CSKH

“We have all worked hard at CSS to turn the ship around from the financial abyss of the past several years and feel we have reached the first and most difficult step in accomplishing that goal. A long and healthy backlog of projects with the first permitted projects breaking ground is a great new beginning for CSS.”

http://www.joenoelstocks.com/stocks-covered/clear-skies-solar-cskh/joe-noel-what-clear-skies-solar-cskh-prepared-for-a-big-move-higher/