Since the mid-1970s as I was being weaned on historical stock market patterns, seasonality and emerging company stock analysis on my off hours from middle school, solar energy and the companies that were trying to bring photovoltaics to market profitably have been attractive to us. Though harnessing the power of the sun into electricity and useable energy has been an ambition of modern society for years, it remained elusive until relatively recently.

Solar energy is on the rise. Unfortunately the United States is not taking the lead in propagating it. Western Europe, China and the Far East are the fastest growing markets right now. But it is only a matter of time before the U.S. gets in gear with a proper solar initiative as it is now proven to be one of the most effective alternative energy solutions and is the ultimate renewable energy source. But until such time innovative American solar companies need to partner overseas and that is exactly what this low-priced, undervalued microcap has done.

Natcore Technology (NXT.V: TSX Venture) has recently entered into a joint venture with a consortium in China to take its solar technology licensed from the Rice University laboratories to the power grid. Natcore China will be 55% owned by Natcore Technology and 45% owned by the Chinese government’s Zhuzhou Hi-Tech Industrial Development Zone and its partners. These partners consist of two Chinese firms that produce polysilicon and manufacture industrial equipment used in the solar industry.

The joint venture will develop and manufacture film-growth equipment and materials using Natcore’s proprietary Liquid Phase Deposition (LPD) technology. The partnership will fund Natcore China with $2.5 million and expects product shipments near yearend 2010.These two Chinese companies will end up being clients of Natcore’s, purchasing supplies and licensing technology.

Natcore’s LPD technology allows a manufacturer to grow the thin films of silicon dioxide needed to make semiconductors, fiber optics, solar cells (as well as many other potential applications) at ambient temperatures, in mild chemical baths, using standard, low-cost equipment. This mild process allows for much thinner wafers and the development of other materials destroyed at 1800 degrees Fahrenheit in the complicated, expensive processes currently widely used.

Natcore’s LPD-produced tandem solar cells have been projected to cost $0.75 per watt and be 30%+ efficient versus the current silicon solar cell’s cost of $1.60 per watt and maximum 17% efficiency. When CEO, Chuck Provini was first brought in to evaluate Natcore’s technology his Naval Academy electrical engineering background, years in the field and on Wall Street made him skeptical. He had the technology independently tested at the renowned Battelle Memorial Labs in Columbus, Ohio and by Russian scientists. Both proved the technology was sound and inquired about getting involved. This convinced Provini to run Natcore fulltime.

Natcore also announced late last month the acquisition of Vanguard Solar, completing its consolidation of all the complimentary and related licensed technology from Rice University. NXT was also featured in a New York Times article on March 18, highlighting the deal in China. Companies from Japan and Taiwan are also evaluating their wafers and there are several other potential applications for Natcore’s technology and thin films. Provini envisions spinning off other companies using different applications of the technologies.

The company has no revenue yet, but we expect that to change in the next 12 months. It is reasonably valued with 35.2 million shares outstanding fully diluted and a market value of just over $20 million. The company has about $1 million in cash and runs a burn rate of about $60,000 a month. This should get them to yearend when revenue begins to come in. At about $1.25 per share $5 million in warrants are in the money and should provide capital. After the recent excitement the stock has moved up some. We like it on a pullback, Buy Limit: 0.52.