MENU

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).

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!