First Solar: Investors Will Not Get a Better Entry Point

At present stage, the market appears tentative of the impending prospects of the solar and alternative energy industry. With varied performance, the market saw escalated short floats of various solar companies and declined short floats of most alternative energy firms.

It is highly likely that this problem is an outcome of the recent bankruptcy of SunEdison. As a matter of fact, overall solar industry is going through emerging pains. Due to the bankruptcy of SunEdison and the struggling Yingli, rivalries for success and markets share are punitive. While the solar industry is on its way to stabilize, some solar companies seem like a long-term winner such as First Solar (FSLR).

First Solar is an influential solar company, but it focuses mostly on building massive utility scale projects.
While SolarCity and SunPower have been hit quite hard this year, First Solar still resides on a safe side.  It is also the most profitable of these companies, and has a great history of generating huge cash by building and delivering large-scale solar projects.

On the other hand, the reason why the company’s shares plunged this year is ambiguity over its business prospect for the next year. Utilities have been sluggish to sign new power purchase contracts after the addition of the solar investment tax credit further than 2016.

But, the most important thing that makes First Solar look striking is its robust balance sheet which permits the company to build new projects and sell them as per requirement. Furthermore, stockholders should also keep in mind that the company is continuously focusing on increasing its panel efficiency as well as its reduction of installation charges towards $1 per watt. The company is storing more energy production into a lesser space.

The company’s focus on both of the above-mentioned things will help it to stay ahead of rivals and captivating deals to create and deliver large-scale solar power plants. As an outcome, the company will be able to reap huge profits.

Conclusion

While many investors may think that a safe solar stock is an oxymoron, I think First Solar’s ability to generate strong cash flow differentiates it from other solar companies. First Solar’s strong balance sheet, cheap valuation, and strong growth make it a great pick for long-term investors. Investors should use the current pullback as an entry point and buy the stock.
Published on Aug 2, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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