24 February 2011

First Solar: Great Expectations in the Sun

I've lived through the best of times and the worst of times with First Solar (FSLR).

Readers of The Green Skeptic know I've been long FSLR for so long. I'm not giving up now.

The company reports 4th quarter and full-year earnings after the close of the market today.

Perhaps in anticipation, there was a run-up on the stock this morning, although not as dramatic as last week's spike.

Over the past 52 weeks, according to SmarTrend Market Surveillance, shares of First Solar have traded between a low of $98.71 and a high of $175.45. It was trading this afternoon at $164.53, 67 percent above the low.

In the last five trading sessions, the 50-day MA has climbed 0.77 percent while the 200-day MA has risen 0.28 percent, according to SmarTrend.

Consensus seems to be the company will report a 6.7 percent rise in earnings-per-share (EPS) versus the same quarter a year ago.

"Regardless of its earnings report, most investors will be looking at its outlook for the coming quarter and full-year," as 24/7WallSt.com reported this morning. "Thomson Reuters' most recent expectation calls for full-year EPS of $9.10 on revenue of $3.76 billion, substantially more than 2010 full-year expectations for EPS of $7.63 on revenue of $2.6 billion."

FSLR beat the last two quarterly estimates, but still got hammered in after hours trading and continued on a downward spiral the following day. (I'm beginning to think my buddy Howard Lindzon puts the kabosh on the stock when he mentions it -- sort of like the Cramer effect.)

Here's why I still believe in FSLR:

FSLR recently expanded its cadmium telluride supply agreement with 5NPlus to 60 percent by 2013.

They recently signed an agreement to build the largest solar plant in China.

Despite subsidy cuts in Germany and a moratorium on new plants in Italy, FSLR is expanding in the US and Canada, along with the Indian and Chinese markets. The company has recently completed a new German manufacturing facility in Frankfurt.

While FSLR slipped behind China's Suntech (STP) as the world's leading solar manufacturer in 2010, they are still the first company to ship more than a gigawatt of capacity two years in a row -- and they plan to increase global production to 2.7 GW by 2012.

First Solar is still the leader in providing the lowest-cost-per-kilowatt modules, a position they don't seem to be giving up any time soon.

Oh, and there's that little factor of oil breaching the $100/barrel mark.

Looking forward to the earnings report and call.

(Disclosure: I hold a long position in FSLR. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)

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