MEMC Electronic Materials isn't suffering for lack of admirers. Among 21 analysts who cover the world's largest independent maker of silicon wafers, 18 say to buy shares. I first recommended the stock just over four years ago. It's nearly triple that price now, vs. a 10% decline for the S&P 500 index. Hold your applause. Nearly a year ago I wrote that it was still cheap. Either I was wrong or the definition of "cheap" has changed. Shares have lost two-thirds of their value in a year. That's twice the punishment that has been handed the average stock.

Was that Dell (DELL) I saw at less than 10 times earnings?) Second, astounding prices for silicon in recent months have lured new manufacturers, particularly in China, to the market. New production is expected to moderate prices -- good news for those looking to buy solar panels, but not for MEMC. Third, U.S. tax incentives for solar panels have, until recently, been at risk of expiring. Fourth, chip makers have largely fixed production costs and highly volatile profits. They're not the sort of companies whose shares offer comfort while the frantic guy on the money channel is talking about financial Armageddon.

MEMC's growth outlook has dimmed, but it remains bright enough. Three months ago forecasters expected the company to earn 30% more this year than last. Now they say 17%. Sales are expected to increase 14%. That is well short of the compounded yearly rate of 23% by which sales have grown over the past four years, but it's something. And last week Congress tucked an eight-year extension for solar panel tax perks into the giant bailout it passed for the financial industry.

For now, MEMC's business is a remarkably profitable one. This year it should turn 45 cents of each sales dollar into operating profit, more than four times the take of the median S&P 500 company. It earns an enviable 34% return on the capital investments, something that recently earned the company a spot with five others on a screen for Efficiency Experts. (Create your own list using SmartMoney's stock screener and the full list of search criteria.) Margins will surely dip in the event of a silicon wafer glut. But it's difficult to build wafer production capacity even when financing is freely available. With credit now extraordinarily tight, recent market entrants might have an especially difficult time.

For its part, MEMC is signing long-term "take or pay" contracts with customers before building capacity, which improves the chances of its investments paying off. Also, the company has few financing concerns of its own. Debt is negligible. Cash on hand totals more than $6 a share. Ignoring the cash, shares go for six times this year's earnings forecast. Subtract the cash from the stock price and you get a price/earnings ratio of less than 5. Last year's free cash flow alone works out to 11% of MEMC's present market value. The company pays no dividend. All that money will afford plenty of expansion; demand in the solar business still far exceeds supply, after all. Alternatively, it can buy back plenty of shares. Last quarter the company repurchased 2.2 million of them, or about 1% of its outstanding count.

Efficiency Experts Screen Recipe
Return on invested capital in to 25% for industry
Return on invested capital greater than 20%
Three-year average sales growth greater than 20%
Three-year average earnings growth greater than 20%
Forward P/E below industry median
Trailing 12-month sales greater than $200 million
Average daily trading volume greater than 100,000 shares