Blessed by the Potato

Dear readers, please indulge me. Follow these instructions, and post your results (anonymously if you wish) in the comments or by email:

“You can measure your head size with a tape measure, going around the circumference of your head, just above the ears. ”

It shouldn’t take you very long.

TD has recently opened up a “store” for TD Visa customers called ShopMyAXS. The name makes no sense to me, I don’t know if the capitalized letters are supposed to be meaningful or not. Apparently it’s a discount club type store that only sells to the clients of certain businesses (such as TD).

It looks like they have a fairly decent selection of random items from TVs to movie passes, board games to sports equipment, with some very nice discounts on some things, along with larger deals of the day. Unfortunately, the only shipping method is Purolator, and that sucks a lot of life out of the bargains. For instance, they have Cineplex Night Out passes (2 admissions, 1 popcorn, 2 drinks) for $20, which is a great deal for those passes. However, the shipping charges are $7 to Toronto (and $12 to London) and there’s a limit of 2, so that makes it barely worth getting ($7 to ship a piece of paper!). An iPod was on sale (and according to Wayfare, iPods never go on sale — I wouldn’t know, they’re not an item I keep my eye on), and there was a fantastic promotion on an LG 42″ TV for $700 + shipping of ~$65. We read some mixed reviews: good picture, but apparently has an audio sync issue with HDMI. That had us on the fence, but it was hard to ignore the fact that it was $100 cheaper than the best price (even last Boxing Day) we had seen on the Samsung we were thinking of getting… so we’ll take the chance on it (especially since we don’t have any HDMI devices yet, unless the Xbox counts). Plus Wayfare’s mom got a 37″ LG TV recently and it’s beautiful — and we got some money from her parents specifically to buy a new TV as a gift (they left it up to us to pick one). I’ll do a review of the TV when it comes in.

The bargain hunters at red flag deals have discovered MyAXS, so if you’re after one of those crazy deals of the day this month, be prepared to log in early!

I don’t usually get too crazy about growth stories and tech stocks — despite being a scientist and fairly technologically-minded myself, I get turned off by the hype and the projections to the moon. I also first started learning about stocks in the midst of the tech boom, and was wisely steered clear of that trainwreck by my dad, who doesn’t believe in negative/imaginary P/Es (negative for a few quarters is one thing, but massive valuations for a company that’s never turned a profit is another).

However, I’ve had my eye on First Solar (NASDAQ:FSLR) for some time. I never bought any before now because the valuations frightened me, but it’s starting to look a little more attractive now.

First Solar is a manufacturer of thin-film solar panels. Solar, green, alternative energy — all buzz words for a hot sector, something I like as an environmentalist, but which actually turns me off a bit as an investor. First Solar is not a pie-in-the-sky startup though: they actually have several plants up and running, some long-term contracts, and are actually turning a profit whilst still in that early “parabolic” growth phase.

On the positive side, they have had a phenomenal growth track record, and have managed to reduce their cost of production while expanding. According to their annual report, they have 2 more production lines that are coming online over the next year or so, to bring them to a total of 24 — so from a volume standpoint they should have at least another ~10% growth in them. They also have very modest debt levels, and a US government that believes in climate change might help subsidize solar plants there. They are the low-cost producer of solar panels, and have focused on improving their margins through the years.

Piling up on the negative side are a number of worrying factors: FSLR depends on a very small number of power companies, all(?) in the EU for the vast majority of their business. Any issues with even one of their customers could trickle down badly for them. Indeed, government subsidies for solar power (esp. in Germany) may be critical to them making sales, and those policies may be on track to be phased out sooner than expected. While there is some advantage in thin-film solar for many applications, large-scale power plants really isn’t one of them — it’s largely just a cost issue. So their main customers have really only been buying due to the low price relative to crystalline solar cells. Recently, those have come down in price as the cost of high-grade silicon crashed (used, as I understand it, in both solar cells and microchips).

So FSLR could be facing some increased competition, squeezing their margins going forward, and depending on how long silicon prices stay low, that pressure could stay on for a long time.

I played around with my spreadsheets for a little while on this one, there are a lot of places to guesstimate how future earnings will play out. I figure the stock is worth anywhere from $60-$160 depending on what assumptions I make, but it does definitely have some value. I figured the most realistic assumption was that their earnings could continue to grow at 10-25% per year for another few years as their production volumes ramped up (even if cost pressures prevent them from significantly improving their margins any further), and after that would settle into a long-term growth rate of 5-7%. I also believe (hope, really) that demand for solar energy will pick up in the US to more than offset any declines from the EU as their subsidies are phased out. From that I get a value of (from memory, since like a genius I closed my spreadsheet without saving) ~$110/share. It was at $116 today, which I figured was close enough to get my fingers into the alternative energy sector, so I bought a few shares. It’s not enough of a value that I can recommend it to anyone (not that I ever make recommendations!), but with the recent pullback it seems to have shed that “hot thing in the news” over-hyped smell.

What are your thoughts?

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In a recent post, I tried to explain that hysteria around vaccinations is uncalled for — they’re not perfect, complications do occur, but they’re generally much less risky and preferable to a pandemic. The idea that the government is out to get you with them is silly.

Ben raised the point about corporations being out to get you, and manufacture hysteria. Just so I don’t give corporations a free pass, let’s explore that idea. First off though, I’m going to say that I really doubt that the flu shot is the vehicle for a corporate takeover of the world. Even with big volume (trying to get 50%+ of the population vaccinated), vaccines aren’t a huge profit centre — governments place the orders and negotiate to shave profit margins, and vaccines by and large aren’t patent protected like many medications (i.e.: there is some competition, and they are not a product with retail markups).

Flu drugs taken after you get sick are a beast of a different nature. On the one hand, they seem like a miracle of modern science: long after we had a full spectrum of antibiotics to use, we still hadn’t developed terribly effective antivirals. On the other, this is where the corporate profits at the expense of the little guy story seems to take hold, if only a little. These drugs are of limited effectiveness (they won’t make your flu go away overnight), and the viruses can rapidly evolve resistance to them. They have a much worse risk profile than vaccines; though that’s not as important because you take them after you get sick. Cancelling that out is the fact that you have to take them so soon after you start displaying symptoms that there’s a high chance people who weren’t/wouldn’t be very sick (or who were running a fever for a non-pandemic flu reason) will be popping them anyway — or contrarily, people who are quite sick won’t get them because it’s silly to go to your doctor the first day after you get a cough.

They are very handy drugs to have stockpiled, especially to keep the front-line healthcare workers on their feet. But Canada purchased 55 million doses — or perhaps to keep the anti-corporate slant going, Canada was sold 55 million doses. A typical course is 10 doses, so that’s enough to treat 5.5 million people, 16% of our population, which IMHO is probably overkill. The figures I have say that in a typical flu season ~20% of the population gets sick; even if that’s more like 30% for H1N1 (even after the vaccination program), we’d have to have half those people see a doctor within a very short time after starting to have a fever, and be willing to take a fairly new-to-the-market medication (after all, these will likely be the people who didn’t want the vaccine). I just have a hard time seeing that happening. I think our government might have been too afraid to be seen doing too little to prepare, and was over-sold the antivirals (which is an easy pitch for the corporations to make in this environment), or was sold them for prophylactic use. Of course, some of those antiviral doses could ultimately be destined for 3rd-world countries as part of our foreign aid efforts, in which case over-stockpiling makes some sense.

The US government has about half as much per capita at the moment, but their stated goal is to have the reserves to treat up to 25% of their population.

Now, all this ranting about Tamiflu over-use is a little two-faced because unfortunately, Wayfare has come down with ILI (Influenza Like Illness — fever, coughing, body aches — they don’t bother to run the lab tests for H1N1 any more since according to the health unit, it’s the only strain of virus on the go at the moment). So, knowing the limitations of Tamiflu (having to start treatment early), we rushed off to the hospital even though she wasn’t that sick. She had a chest x-ray and was prescribed Tamiflu (as well as an over-the-counter sinus cleanser such as hydrasense — I thought those things were pure quackery at first, but apparently there is some belief that they help). Given how scary this strain of flu can be in young people, it seemed like a prudent thing to do. The government even gave us the Tamiflu for free!

As for me, I had my shot on Monday, but it takes 10-14 days to build up immunity, so I’ve got a small window here where she can infect me. I’ve just got to stay holed up in my office for another week…

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From Health Canada:

The H1N1 vaccine contains 2.5 micrograms organic mercury (Hg) per 0.5mL dose.

Tuna can contain over 0.5 ppm of mercury, so 5 g of tuna would give you as much mercury as the shot — about 1/30 of a can.

The vaccine in no way represents a medically significant dose of mercury.

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