First Solar (Nasdaq: FSLR): Stock of the Day
by David Fessler, Advisory Panelist
My Top Solar Pick…
In my regular Investment U Friday installment, I’ll give you my top 5 solar picks, and why I think they could be your best investments for 2009.
But for now, let’s talk about the top gun in solar: First Solar (Nasdaq: FSLR). What gives it top billing? It’s the industry cost leader by a wide margin… the only manufacturer able to produce panels at under $1.00 per watt.
It’s one of the reasons First Solar shares were one of the darlings of Wall Street, soaring 942% between January 2007 and May 2008.
But the stock got hammered down 50% in the last six months as lock-jawed credit markets sent investors running for the exits.
Many of First Solar’s competitors took even bigger hits, with some down over 60% in the same timeframe.
How can First Solar be so far ahead of its competitors? Simple. It’s economies of scale that translate into one thing: lower prices and better market share. But that’s not all.
It’s cadmium telluride thin-film technology is the industry’s current price/performance leader, and it will ultimately send competitors that are making the less efficient polysilicon-based panels packing.
It also recently announced the acquisition of OptiSolar and it’s utility solar project pipeline. The acquisition includes the following projects:
- A 550 Megawatt (MW) project under development with Pacific Gas and Electric.
- A pipeline of 1,300 MW of additional projects being negotiated with Western region utilities.
- Land use rights of approximately 136,000 acres (about 210 square miles) ultimately allowing the construction of roughly 19 Gigawatts (GW) of solar generating capacity.
These agreements will result in the company significantly expanding its presence in the utility-scale commercial power market.
Back in 2007, in anticipation of expanding its presence in the utility solar power sector, the company acquired Turner Renewable Energy. Turner’s considerable expertise in engineering, procurement and construction of utility-scale solar installations is just what First Solar needs to move ahead with these immense projects.
Its annual manufacturing capacity will hit 1,100 MW in 2009. This is something along the lines of a reasonably sized nuclear power plant.
Industry experts predict a doubling of installed solar capacity in the U.S in 2009, and again in 2010.
It gets even better: growth will likely continue to ramp in a big way here in the U.S. and by 2016, our total installed base could equal that of the rest of the world. And even if that happens, total worldwide energy gleaned from solar will still be less than 3%.
That translates into lots of room for growth, and First Solar is poised to capitalize on it.
Good investing,
Dave Fessler
Any investment contains risk. Please see our disclaimer.
2 Responses to “First Solar (Nasdaq: FSLR): Stock of the Day”
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David Fessler is the energy and infrastructure expert for Investment U.
And where the Tellurium and the Rare Earths required for this fantastic production come from?
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Here’s a dissenting view on FSLR from a rival newsletter:
“This huge increase in supply is enabling polysilicon-based panel makers for the first time to sell their products cheaper on a per-watt basis than thin-film panel makers (like First Solar)… I expect to see polysilicon-based solar completely replace thin-film solar over the next few years – starting right now… First Solar reports earnings this Thursday. I’m 100% sure First Solar’s earnings report is going to be worse than expected and reveal declining market share. I expect the shares of First Solar to continue to perform poorly…”
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