< Return to Bulls page

I am turning from a FSLR Bear to a Bull - due to compelling valuation.

Pick #3. (Source Bapcha's Stocks)

First Solar. I picked FSLR at #3 - despite their superior gross margins because:

a. Sand is cheaper than CdTe [but like it was already mentioned in a prior paragraph, it takes a lot of cheap energy to make pure Solar-cell grade silicon]. b. Thin film based solar panels [the kind FSLR makes] are less efficient than silicon-based PV modules. c. Apart from being less efficient, thin-film based solar cells have much worse performance at low-light conditions - compared to silicon based solar cells. (*edit* this is incorrect or misleading. thin-film has a reputation for performing better under soft reflected,sun on overcast or otherwise indirect sunlight. the more efficient silicon based PV cells like those made by sunpower require a mechanism to keep the panels facing the sun *edit) d. FSLR sells at a premium valuation. At $110/share, FSLR’s market value of $9 Billion is a multiple of 9x TTM sales. On a TTM PE basis, the stock sells at 32x.

Notes: A. Double digit ROI calculations based on a PV system that generates 4KW. We priced the system through multiple installers, and assumed a PG&E credit of $1.90/Watt and the Federal Tax Credit (30%) for grid connections after Jan 1, 2009. B. We focus on gross margins and growth rates and cash flow in this article. While we did look at earnings, PE, etc., what matters for semiconductor companies - is valuation, gross margins and growth rate. C. The “President Elect Effect” impacted these stocks positively only for a week - as the market realized that all that the part of the $850 Billion that affects alternative energy does - is to continue the subsidies for businesses and increase subsidies from a $2000 tax credit/installed system to a credit of 30% of the cost of an installed system - for individuals. The non-business PV market represents only about one percent of the total US PV market. D. FSLR’s modules are the hardest to recycle [though the company will gladly do it for you if you ship it to them to the appropriate location]. E. STP uses both poly and single crystalline silicon based cells in their PV modules. F. No positions in any of the mentioned stocks.

Wikinvest © 2006, 2007, 2008, 2009. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.