Buy, Sell, or Hold: First Solar and the Power Revolution
Green Chip Review Weekend Edition
If you haven't had a chance to read any of Steve Christ's stuff. . . you're missing out. He's the managing editor of our sister site, Wealth Daily, offering his expertise on real estate and biotech markets. But this week, he has his sights on First Solar, so I thought I'd pass it along.
Buy, Sell, or Hold: First Solar and the Power Revolution
Given the recent decline in shares of solar power stocks, the solar doom and gloomers just can't help themselves these days.
They've come out of the woodwork with their scary tales of impending woe.
In fact, the chorus from these folks turned downright cloudy in August after analysts from Jeffries & Co. downgraded the entire solar sector amid new pricing fears.
"We expect rapid growth in solar volumes," Jeffries said in a note on August 21, "but a downward pricing spiral and lack of discipline around capital deployment leave us cautious on cell and module manufacturers."
Those dark warnings sent shares of nearly every company in the sector into an immediate tailspin, including shares of First Solar stock, which Jefferies cut to from a hold from a buy.
However, as my old pal Nick Hodge said to me on the morning of the news, the Jefferies call was a bit over the top. "It was," the green guru said, "completely unwarranted."
That has given investors with a time frame longer than it takes to eat a sandwich yet another opportunity to invest in one of the few true growth sectors, including in well-run U.S. companies like First Solar Inc.
As for the industry itself, it appears the anti-solar crowd's fears aren't warranted either.
In that regard, consider the following recent developments within the industry that will undoubtedly help to boost future sales:
- On August 13, the U.S. government announced a program to award $2.3 billion in tax credits to manufacturers of advanced energy equipment. Authorized by the February stimulus bill, this new provides tax credits to manufacturers who produce clean energy equipment.
- On July 30, the Energy Department announced it is making up to $30 billion in loan guarantees available for renewable energy and electric grid modernization projects. The government-backed authority should help boost lending capital for renewable and other clean-energy technology projects, which has dried up with the financial recession.
On top of that, when it comes to renewable energy, let's just say the industry also has more than a few friends in high places, including Energy Secretary Steven Chu. An actual Nobel Prize-winning scientist, Chu is one of solar power's biggest supporters.
In fact, according to Chu, the administration's new goal is to double renewable electricity generation over the next three years. "To achieve that goal," Chu said, "we need to accelerate renewable project development by ensuring access to capital for advanced technology projects."
That means the government will be there to help push these new technologies forward - now and in the future - by whatever means necessary.
Of course, that's not to say that the solar power industry hasn't had its share of problems lately. It has. The industry has definitely been hurt by excess capacity, tight credit, and a bloated inventory of panels that iSuppli predicts will not end until 2012.
On top of that, there is a supply glut of polysilicon that has hurt the industry's earnings and margins this year.
Even still, given the combination of eventual improvements in the technology and favorable government policies both here and abroad, solar power as a long-term investment is one whose time has definitely arrived. . . all doom and gloom aside.
And in this free six-page report, The Wealth Advisory Research Team has broken down the one of the most promising solar power giants, answering the question on every investor's mind these days. . .
Is First Solar Stock (NASDAQ: FSLR) a Buy, Sell or Hold?
In this free report, Wealth Daily subscribers will receive:
- The results from The Wealth Advisory's proprietary scoring model
- A buy, sell, or hold recommendation
- A 12-month Price Target, along with a current Stop/Loss
- A technical and fundamental analysis of the company's share price
- And much more. . .
To receive a free download of this report and our Buy, Sell or Hold recommendation for First Solar Inc. (NASDAQ: FSLR), click here.
I hope you enjoy your free First Solar report. I'll be publishing many more of these in the weeks to come. . .
Your bargain-hunting analyst,
Steve Christ, Investment Director
The Wealth Advisory
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