This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

First Solar, Evergreen Solar: What You Need to Know

Editor's note: This was originally published on RealMoney. It is being republished as a bonus for TheStreet.com readers. To subscribe to RealMoney, click here.

Shares of First Solar (FSLR - Get Report) are off roughly 20% today Feb. 25 to around $110. It could have been worse: Some analysts slashed their price targets down to the $60 to $90 range on the heels of a more cautious management outlook for 2009.

Shares do indeed look vulnerable to further selling, as the next few quarters could prove to be a bit scary. But shares are unlikely to reach those most bearish targets, as the company's brighter longer-term outlook is likely to lure buying support if the stock breaches the $100 mark.

Most importantly, as I'll note in a bit, the outlook for smaller, more poorly capitalized rivals could really get hammered in coming quarters.

At first glance, First Solar's quarterly report was quite impressive. Fourth-quarter sales rose 24% sequentially to $434 million, and full-year sales rose more than 140% to $1.25 billion. The $132 million in quarterly profits made a strong cash balance even more impressive, rising to $852 million. Most rivals are far less flush, and those that hope to raise money to keep going in 2009 may be out of luck.

First Solar also broke the magical $1 mark in terms of costs per watt. That's an industry first, and it keeps the company well below its peers that rely on polysilicon. In fact, management says that metric could fall to 65 cents in a few years, which implies that we are moving closer to the day when solar power can effectively compete with fossil fuels without the support of subsidies.

That's the good news. The bad news: The current year is shaping up to be pretty lousy. Customers are having a hard time borrowing money for projects, rivals are benefiting from sharp drops in polysilicon prices (spot prices have fallen from a peak of about $450/kg in mid-2008 to below $150 kg), and the industry continues to overproduce, thanks to capex decisions made a year or two ago.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
LDK $0.00 0.00%
STP $0.53 0.00%
FSLR $51.06 -7.28%
JASO $8.70 -0.11%
AAPL $129.62 -2.20%

Markets

DOW 18,041.54 -190.48 -1.04%
S&P 500 2,104.20 -21.86 -1.03%
NASDAQ 5,032.7510 -56.6110 -1.11%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs