Alternative Energy Will Be Hot for the Next Decade

Remember Trina Solar Inc. (NYSE/TSL)? This China company trades on the New York Stock Exchange and came to the market at around $20 per share in mid-December last year. Now this stock is trading around $45 per share. That’s serious capital appreciation in a short period.

The alternative energy investment theme is here to stay for a long time. And it’s not only solar energy stocks that have Wall Street’s attention. Pollution control and new environmental technologies are also going to be hot over the next decade.

Another new hot stock related to the solar energy industry is First Solar Inc. (NASDAQ/FSLR). This company distinguishes itself in the field because it is American.

Based in Phoenix, Arizona, the company manufactures solar modules with an advanced “thin film” semiconductor process that helps reduce solar electricity costs. The company currently sells most of its product in Germany, where the adoption of solar energy is becoming widespread.

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Very soon, policy makers in other Western countries could introduce more legislation promoting solar energy use. If that happens, you’re going to see a whole new industry flourish in this country.

In its fourth quarter ended December 30, 2006, First Solar’s revenues grew to $52.7 million, up from revenues of $40.8 million generated in the third quarter of fiscal 2006 and up substantially from revenues of $13.6 million generated in the fourth quarter of fiscal 2005.

For all of 2006, the company’s revenues grew 181% to $135.0 million, up from revenues of $48.1 million in fiscal year 2005.

Net income for the fourth quarter of fiscal 2006 was $8.04 million, or $0.12 per share, as compared to a loss of $7.2 million, or ($0.14) per share, in the fourth quarter of 2005.

For all of fiscal 2006, net income was $3.97 million, or $0.07 per share, as compared to a net loss of $6.5 million, or ($0.13) per share, in fiscal 2005.

Right now, First Solar is expanding its Ohio manufacturing plant, and is currently building a new manufacturing plant in Germany. As with most solar energy manufacturers, demand isn’t an issue, only the supply of raw materials is.

My feeling is that solar energy stocks are only going to get more popular over the coming years. This doesn’t mean these stocks are attractive from a valuation standpoint, only from a sentiment/trading perspective.