Market Insight: First Solar Hitting on all Cylinders
February 28, 2008
First Solar, Incorporated (FSLR) is really doing quite well in the market right now with more upside still to come going forward. The company manufactures its solar modules on high-throughput production lines. Its solar modules employ a thin layer of cadmium telluride semiconductor material to convert sunlight into electricity. First Solar recently completed its Ohio expansion, adding two 25 megawatt production lines to its existing 25 megawatt base plant.
The company describes its production capacity with a nameplate rating, which means minimum expected annual production. It assigns each production line a 25 megawatt nameplate rating. With the completion of its Ohio expansion, First Solar has an annual manufacturing capacity of 75 megawatt. The company is also building a four line 100 megawatt plant in Germany.
First Solar’s PV modules are designed for use in large scale, grid connected solar power plants and are sold to leading solar project developers for use in commercial PV projects. The company’s application engineers work with the project development partners to design the perfect balance of solutions for use with First Solar PV modules, ensuring high performance and long term reliability.
This stock is solid from a fundamental perspective with great sales and earnings growth. Latest earnings showed quarterly revenues were $200.8 million, up from $159.0 million in the third quarter of fiscal 2007 and up from $52.7 million in the fourth quarter of fiscal 2006. Revenues for the fiscal year ended December 29, 2007 were $504.0 million, up from $135.0 million in fiscal year 2006.
Net income for the fourth quarter of fiscal 2007 was $62.9 million or $0.77 per share on a fully diluted basis, compared to net income of $46.0 million or $0.58 per share on a fully diluted basis for the third quarter of fiscal 2007. Net income for fiscal 2007 was $158.4 million or $2.03 per share on a fully diluted basis compared to net income of $4.0 million for fiscal 2006 or $0.05 per share on a fully diluted pro-forma basis.
The stock looks solid technically showing an Elliott Wave-4 pullback projecting gains into the $340 per share area by the July timeframe. First Solar has a liquid options market that also offers LEAPS allowing the option strategist to construct longer term positions, if so desired.
Figure 1: Elliott Wave-4 Buy Pattern for First Solar
(Source: Profit Source)
For more information on First Solar, see Chris Tyler’s Daily Delta: First Solar (Feb 27, 2008).
Happy Trading.
Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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