And the Award for the Best Solar Stock Goes To...First Solar

First Solar (FSLR) is one of the few top quality stock in the solar industry. First Solar’s profitability, high efficiency and strong balance sheet makes it the best investment of the sector. The company has always paid attention to its earnings, whereas other players in the industry were worried about their product line up and seizing market share.

First Solar has detailed a positive bottom-line for seven out of the last eight quarters mainly due to the company’s leading panel technology. Throughout the past few years, the company’s business has gradually surged.
Revenue on an annual basis has escalated 30 percent during the last five years, and net income is up 56 percent.

On the other hand, SunEdison’s (SUNE) decision of filing for bankruptcy has generated a great opportunity for First Solar. This not only means a huge competitor is out of the game, but also indicates that deals signed by SunEdison could possibly be bought for a lesser amount by First Solar. But it is still not clear if there will be assets or not to buy.

Apart from these, the company’s efficiency has surged from 15.6 percent to 16.4 percent in the last three quarters. Furthermore, First Solar is trying to achieve an efficiency of 17 percent. If the company reaches that mark, it would make it marginally more efficient than commodity silicon panels, which is a huge win for First Solar from a viable point of view.

Solar energy sector is also growing at a rapid rate, ands recently Dubai Electricity & Water Authority (DEWA) publicized that it had received five bids to construct 800 MW of solar capacity, with a lower bid of 2.99 cents per kWh. However, it cannot be definitely said what utility pays for electricity when certain factors are included, but the datum that solar is even impending 3 cents per kWh is marvelous.


I fail to understand the reason why First Solar is trading at such a cheap valuation when the company is highly profitable and is growing at a rapid pace as well. Not only that, but First Solar has a strong balance sheet, which is rare in the solar industry. Also, unlike other solar companies, First Solar is profitable despite reporting strong revenue growth.

All in all, First Solar seems to be the best stock in the solar industry and the recent pullback has provided a great opportunity for long-term investors to buy the stock.
Published on Jun 15, 2016
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

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