First Solar Has Everything Going Its Way

BOSTON (TheStreet) -- A basic assumption about the stock market is that it's efficient, accounting for all information and pricing securities according to their true worth. That's sometimes not the case.

The stock market has done some screwy things this year. In March, major indices tumbled to a low not seen in more than a decade, decimating investors' wealth. But since that dramatic decline, the Dow has surged 43% and the S&P 500 is up 49%. There's a bull market under way. Yet certain industry leaders haven't matched index gains.

The company that's perhaps farthest behind its benchmark, but shouldn't be, is First Solar(FSLR Quote). Not only is First Solar technologically superior to oil and gas giants like Exxon Mobil(XOM Quote) and Chevron(CVX Quote), it's also the cost leader in its industry and recently achieved a net margin of more than 34%. The key thing to know about First Solar is that it generates electricity at a lower cost than conventional sources without emitting carbon dioxide. That's why it will be huge.

The Phoenix-based company has managed to increase revenue and earnings by double digits for six consecutive quarters. First Solar is enjoying unsolicited assistance from Uncle Sam, who is generating business through stimulus projects and offering massive tax incentives for panel buyers. As the company's stock is down 45% over the past year -- and 25% over three months -- now is a great time to start buying its shares.

First Solar was the only U.S. panel producer to achieve a first-quarter profit, and it extended its operational outperformance into the second quarter, boosting net income by 159% to $181 million as revenue almost doubled to $525 million.