logo
  Join        Login             Stock Quote

Could First Solar Shine Again?

 February 14, 2013 09:49 AM
 


by Timothy Lutts, editor Cabot Stock of the Month

Back in 2007, First Solar (FSLR) rose over 1000% before crashing. Today, it is profitable and cheap, analysts are raising their estimates, and the long-term potential is very positive as the cost per watt of solar power falls year after year.

When the solar market inevitably booms, First Solar --  -- our latest Stock of the Month --  is in position to be the market leader.

First Solar came public in December 2006 at 26, and soared all the way to a high of 317 in May of 2008. The base that was built following that crash—and which centered on 140— didn't hold, and the stock crashed again in 2011 and 2012.

[Related -First Solar, Inc. (FSLR) Q3 Earnings Preview: International Growth, Cost Improvements In Focus]

It's been less than a year since the second crash, so it's possible the stock needs more time. On the other hand, it's been five years since the first crash, and that's the one that took the stock out of the limelight.

In any case, the stock has built a new uptrend! It's spent January consolidating its recent gains, while its 50-day moving average caught up. Today, there's support at 25.

Getting to the fundamental story, First Solar is the king of the solar cell business, making its photovoltaic cells from cadmium telluride (CdTe). Founded in 1999, it's grown revenues every year of its life, and there's no reason to believe that trend won't continue.

[Related -Options Light Up At First Solar, Inc. (FSLR) As Shares Zip Higher]

The story with earnings, however, has been slightly different. The company turned profitable in 2006, and grew earnings steadily as global demand boomed; particularly instrumental was Germany, where government incentives spurred installations.

Then Chinese companies ramped up production, leading to global excess capacity, while the mortgage and housing collapse, combined with the Eurozone troubles, depressed demand, leading First Solar to shutter its Germany factory, shut down four production lines in Malaysia, refocus its business on utility-scale products and appoint a new CEO!

In other words, the company has been through the wringer! But after posting losses in the last quarter of 2011 and the first quarter if 2012, First Solar is making profits again, and analysts have recently been raising their estimates (calling for $4 per share in 2013).

Furthermore, the long-term potential for the company remains unchanged; as the cost per watt of solar power falls year after year (just as the cost of silicon-powered computing capacity has fallen for decades and keeps falling), the market will boom, and First Solar is in position to be the market leader. I recommend buying now.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imagePossible Bond ETF Problems

There have been a few parties worrying about crises stemming from ETFs, because they make it too easy for read on...

article imageThe Permanent Scars Of Fiscal Consolidation

The effect that fiscal consolidation has on GDP growth has probably generated more controversy than any read on...

article imageADP: Private-Sector Payrolls Rise 213k In September

Private-sector employment continued to rise at a moderate pace in September, according to this morning’s read on...

article imageSuspicions Over ADP Employment Make-up

he private payroll processor noted that the sixth continuous payroll gain above 200,000 was a “positive read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.