Dyesol: Impressive technology, but racking up the losses

Dyesol Ltd (ASX: DYE) is currently at the very forefront of developing technology to harness solar power.

As the most abundant, consistent and cleanest power source available to us, much hope has been put in the ability of science to develop the technology to capture, convert and store the power than the sun has to offer us.

Listed on our market since late 2005, Dyesol has long hoped to deliver on the promise of Dye Solar Cell technology. In the heady days of pre-GFC excitement, shares in Dyesol went from a low of just over $0.20 in early 2006 to a high of $2.35 in August 2007 before beginning what was to be a relatively constant slide to a low of just $0.17 earlier this month, for a 93% loss.

The technology, if it can be reliably commercialised, may hold some promise. Described by the company as akin to ‘artificial photosynthesis’ and has potential to be used in lower light conditions than traditional solar panel technology. Impressively, it can be used in place of glass, to increase the surface area over which the panels can collect solar energy.

There’s no question, the technology is impressive in concept, and we’d all prefer cleaner energy and lower pollution. The question for investors is whether Dyesol can effectively commercialise the technology to provide a return for shareholders.

A technology in need of business

The company has partnered with some impressive players, who all seem interested in the potential of the company’s dye-sensitised solar cell (DSC) technology, but as yet, the uptake hasn’t been sufficient to create consistent shareholder returns. Of course, there are also competing solar and other technologies (clean and otherwise), so even if the technology can be commercialised, there’s no way of knowing what proportion of the market Dyesol can capture.

In fact, the business has shown growing losses each year of the last five, from $3.6m in  2007 to $17.3m in 2011. It’s perhaps unsurprising then to see Dyesol raising more capital through a shareholder purchase plan.

I have no doubt that the company’s technology works, or that it is has some exciting potential. However, neither the company nor investors know the size of the eventual market or what (if any) technologies are current being developed or will be developed in future that may usurp Dyesol’s position.

Foolish take-away

There are no shortage of promising businesses that never quite make it for one reason or another.

From an investing perspective then, a stake in Dyesol can only be considered speculative – not for lack of effort from the company, but simply because of the uncertainty inherent in its business. In such a case – and in the case of many a speculative miner and biotech hopeful, buying shares is little more than pure speculation.

If you are looking for ASX investing ideas, look no further than “The Motley Fool’s Top Stock for 2012.” In this free report, Investment Analyst Dean Morel names his top pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time.

More Reading:

Scott Phillips  is a Motley Fool investment analyst . You can follow him on Twitter @TMFGilla.  The Motley Fool’s purpose is to educate, amuse and enrich investors.  This article contains general investment advice only (under AFSL 400691).

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.