Solar stocks had a choppy ride in recent weeks. But what if you still want to invest in solar companies? Luckily, there is one that has proven to be more solid than many of its peers—First Solar, Inc. (NASDAQ:FSLR). In fact, Deutsche bank just said that FSLR stock could go up to $86.00.
If you have been paying any attention to solar stocks recently, you’ll know that most of them have not been safe harbor investments. SunEdison Inc (NYSE:SUNE) shares went from more than $30.00 apiece to penny stock levels. SolarCity Corp (NASDAQ:SCTY) stock plunged more than 68% in less than four months.
Why FSLR Stock Is THE Solar Stock to Watch
FSLR stock is a rare find in today’s solar sector. In the past few months, First Solar stock’s price has climbed from the low $40.00s to the high $60.00s. And the climb could very well continue. Deutsche Bank gave FSLR stock a “Buy” rating with a price target of $86.00. That would imply another 25% upside! (Source: “5 Reasons Deutsche Bank Still Likes First Solar Stock,” Benzinga, February 3, 2016.)
The nature of First Solar’s business makes it one of the most solid companies in the solar industry. You see, First Solar is not installing solar panels on residential rooftops. Instead, the company’s main clients are wholesale buyers, like utility companies. This could mean more certainty and stability in First Solar’s future business.
Also, utility-scale solar installers might be the biggest winners in the next solar boom. According to a recent report by IHS Technology, the extension of the Investment Tax Credit (ITC) in the U.S. should increase photovoltaic (PV) installations by 60% this year to 15 gigawatts (GW). (Source: “US Continues Solar Installation Boom, with Extended Investment Tax Credit, HIS Says,” IHS Technology, February 2, 2016.)
What could be a huge catalyst for First Solar is that a large part of the increase in PV installations might come from utilities. The report suggests, “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.)
The Bottom Line on FSLR Stock
There you have it. By being a utility-scale installer, First Solar’s business is more stable and could see faster growth. It also helps that the company has a solid balance sheet and delivered a massive earnings beat last quarter.
Going forward, First Solar’s guidance for 2016 seems to be on the conservative side. If the company can top analyst’s estimates in the upcoming quarters, there would be more reason for investors to rush toward FSLR stock.