Sometimes you find remarkable companies match with a great stock. Case in point: First Solar, Inc. (NASDAQ:FSLR) stock. First Solar stock is both a wonderful business and a great company.
In case you haven’t noticed, the past year hasn’t really been that nice to solar stocks. For instance, SolarCity Corp (NASDAQ:SCTY) has plunged more than 65% in the past 12 months; Canadian Solar Inc. (NASDAQ:CSIQ) is down more than 30%; and let’s not forget about SunEdison Inc (NYSE:SUNE), which crashed nearly 95% during the same period.
How did First Solar stock perform all this time? Well, in the past 12 months, FSLR stock has climbed more than 27.7%, from $54.07 to $69.03.
Exactly how did First Solar manage to achieve that?
FSLR Stock: The Most Solid Solar Company
Well, first of all, the nature of First Solar’s business is different from many other solar company’s. Instead of installing solar panels on homeowners’ rooftops, First Solar’s main clients are wholesale buyers like utility companies. The nature of the company’s business could mean more stability in FSLR stock moving forward.
Also, it doesn’t hurt that the company is beating analysts’ estimates. In its most recent quarter, First Solar generated $942 million in net sales, beating Wall Street’s expectation of $929 million. As for the bottom line, the company earned $1.60 per share, a huge positive surprise compared to expected earnings per share (EPS) of $0.78. (Source: “First Solar Inc. Announces Fourth Quarter & Full Year 2015 Financial Results,” First Solar, Inc., February 23, 2016.)
Some might argue that since First Solar is not in the rooftop solar business, it won’t benefit from the extension of government incentives for solar energy as much as the residential installers. But that’s not really the case.
According to a report by IHS Technology earlier this month, utility-scale installers might actually be the biggest winners. (Source: “US Continues Solar Installation Boom, with Extended Investment Tax Credit, HIS Says,” IHS Technology, February 2, 2016.)
The report predicts that with the extension of the investment tax credit (ITC) in the U.S., photovoltaic (PV) installations could grow 60% this year, hitting 15 gigawatts (GW). Moreover, the reports notes that the bulk of the increase in PV installations in 2016 would be “primarily due to strong demand for utility-scale PV.” (Source: Ibid.)
Going forward, utility solar companies could have tremendous potential, according to the report: “While all market segments are expected to benefit from the ITC extension, utility-scale PV will benefit most and account for over half of newly added capacity from 2016 to 2019.” (Source: Ibid.)
First Solar is already a leading installer in the utility-scale solar sector. Installations by the company’s engineering, procurement, and construction (EPC) group recently surpassed six gigawatts of capacity. (Source: “First Solar EPC Surpasses 6GW of Global Installed Capacity,” First Solar, Inc., February 23, 2016.)
Right now, First Solar is installing between 30 and 40 megawatts per week. The company has approximately two gigawatts of active projects around the world.
The Bottom Line on FSLR Stock
I believe that solar power is the future. No matter what kind of hurdles might come in the way, we will eventually see mass adoption of solar energy. That’s just my vision.
If you share this vision and want to invest in solar, FSLR stock is definitely worth a closer look.