First Solar (FSLR) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified First Solar ( FSLR) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified First Solar as such a stock due to the following factors:

  • FSLR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $207.0 million.
  • FSLR has traded 2.9 million shares today.
  • FSLR traded in a range 215.5% of the normal price range with a price range of $4.92.
  • FSLR traded above its daily resistance level (quality: 116 days, meaning that the stock is crossing a resistance level set by the last 116 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on FSLR:

First Solar, Inc. provides solar energy solutions worldwide. The company operates through two segments, Components and Systems. FSLR has a PE ratio of 15.3. Currently there are 3 analysts that rate First Solar a buy, 2 analysts rate it a sell, and 9 rate it a hold.

The average volume for First Solar has been 4.0 million shares per day over the past 30 days. First Solar has a market cap of $5.6 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.11 and a short float of 25.5% with 3.90 days to cover. Shares are up 5.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates First Solar as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, FSLR's share price has jumped by 97.13%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • FSLR's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FSLR has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The revenue fell significantly faster than the industry average of 5.2%. Since the same quarter one year prior, revenues fell by 28.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for FIRST SOLAR INC is currently lower than what is desirable, coming in at 32.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.49% significantly trails the industry average.
  • Net operating cash flow has decreased to $192.21 million or 41.32% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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