Andrew Snyder says solar panel manufacturer XsunX (OTC:XSNX) could be a great speculative stock buy. The company has just announced a major new two-year contract that could rejuvenate its business. But with a history of false dawns, Andrew says investors must tread very carefully.

This from Today’s Financial News:

He is either going to be a hero or an absolute zero. For nearly three years now, Tom Djokovich, the CEO of XsunX (OTC:XSNX), has been promising investors that his fledgling solar panel manufacturer was on the cusp of a major sale.

When I talked with the executive early in the winter of 2005, he kept the company’s official word that it would have its first sale by that spring. Investors flocked to the company, speculating big gains were on the way.

The alternative energy boom was just starting to gain traction and investors believed XsunX was going to be a huge winner. Shares soared from less than $0.25 to almost $3.00 from June of 2005 to April of the following year.

The orders never came.

Share price has been dropping ever since. In fact, investors recently had to endure the pain of 52-week lows below $0.18. The action has not been pretty.

Solar manufacturer or P.R firm?

The decline in valuation is certainly not for a lack of trying on behalf of the company’s public relations team. For the past two years, every new hire, new supplier contract, new investment and even the company’s attendance at industry conferences has been pumped through the media engine.

The shoddy releases were from a desperate company making desperate moves. Investors eventually grew tired of the failed promises and lack of any real information. The more press releases XsunX issued, the further its price dropped.

It is no wonder investors are desperate for answers after yesterday’s announcement. XsunX actually announced a major order. It has entered a two-year contract with a solar power company working on projects in California and Hawaii.

According to XsunX, in exchange for $37 million, the company will supply 15 megawatts worth of its solar modules. A third of the order will be filled in 2009, with the remaining 10 megawatts supplied in 2010.

That is about all the company has said on what should be a monumental subject. It has not mentioned how it will produce the modules or where it will find the cash flow to being operations. After all, its newly leased 90,000-square foot production facility, which is undergoing major renovations, appears nowhere close to being complete. The last I heard, production was not supposed to begin until April of 2009.

Not buyin’ it

It was no surprise to see shares of XsunX jump on yesterday’s news, from $0.19 to $0.25. After all, this company has a long history of getting positive attention just when investors believe the end is near. But if investors truly believed in the company, its management and its products, shares would have climbed even higher.

With almost nothing left in cash, an array of expenses and no hope of finding ample credit in this market, I remain leery of this company’s future success.

Yesterday’s news, if it turns out to be the real deal, could be the company’s saving grace, but we have been here before.

If you are looking for an ultra-speculative play, this is it. As for me, however, I am waiting to see what comes next. If the company can make it through next spring, I will be investigating the situation again. For now, it looks like yet another costly trap.

Source: Solar industry investing: Is XsunX (XSNX) the real deal?