“Soaring, leaping, jumping, glowing” - just some of the words analysts are using to describe today’s stratospheric Wall Street performace from First Solar (nasdaq: FSLR). Share price for the Phoenix-based manufacturer of low-cost photovoltaics rose over $57, or 30% in a single day of trading(!) Some are beginning to wonder out loud if this may be the Google of green tech. Introduced at $20 per share just last November, FSLR stock closed at $224.43 this afternoon - that’s an eleven-fold increase in one year’s time!
Did somebody say “Bubble”? These days it seems that each week brings yet a new story of some hot Solar startup making it big. It would be easy to conclude that this sector has overheated and sits ripe for a dot.com-style crash. P:E ratio for FSLR hangs around an alarmingly high 187.
But not so fast…. While some volatility and correction is certainly to be expected, First Solar’s rise in share performance reflects more than mere speculation. Driven by explosive demand in the industry, which is forecasted for 35-55% annual growth through at least 2010, and its leadership position in Cadmium Telluride (CdTe) and thin films, First Solar has posted some phenomenal 3rd Quarter earnings to underpin its share price. Earnings were up ten-fold over Q3 of 2006, and Q3 sales almost quadrupled to $159 million. Sales growth has ranged from 146% to 392% in the previous four quarters. Analysts have actually seriously underestimated the company’s growth potential. Q3 earnings outperformed Wall Street expectations by about $40million, or 39 cents per share!
FSLR has benefitted from beating their competition to market with CdTe and thin film technologies. From CNET.com -
Although they are not as efficient as silicon cells, cadmium tellurium cells are comparatively cheap to make and are fairly robust. They operate in a wide temperature range and in a variety of light conditions, including dawn and dusk. In other words, cadmium telluride is the Honda Civic of solar-panel material.
FSLR’s customers are primary large-scale grid-connected power companies other large commercial projects. Much of their business to date has been with Germany, which leads the world in solar capacity, but the firm predicts that new renewable mandates for utility companies in the U.S. will launch domestic sales within the next couple of years.
But perhaps the most intriguing element of this story is the identity of FSLR’s largest shareholder - the Walton Family of WalMart fame. Today must have been a day of great rejoicing in Bentonville, Arkansas, but this just confirms the consipracy theory I’ve been espousing all along. WalMart is actually secretly responsible for all global warming. They’re in with Al Gore, I’m telling you!
Uh, just kidding.
