2024-07-15 08:18:15 ET
Summary
- First Solar has huge growth coming online through 2026.
- FSLR's technology leads the industry in key areas, and is positioned perfectly for future advances.
- Industry-leading margins, net cash balance sheet, and booked order log provide a firm foundation.
- China and Inflation Reduction Act risks are overdone.
First Solar ( FSLR ) has been on a wild ride recently. I have followed the stock closely for years and never understood why it remained under the radar, that is, until UBS tied it directly to AI as a provider of clean energy for power-hungry data centers. Indeed, exactly this has been happening for years, with FSLR partnering with [[MSFT]] to provide clean energy for data centers, while also utilizing Azure cloud technology throughout their proprietary manufacturing processes.
I was quite surprised to see the stock rocket up over 50% in the month following UBS's report, only to crash more than 25% since then. So where are we now? Since the market's valuation of FSLR has been all over the place (so much for efficiency), what should their stock be worth?
I want to start with an image from FAST Graphs to set the scene:
A longer date range makes the expected growth look even more stunning:
Just to be clear, FAST Graphs is forecasting a fair value over $400 by the end of this year, and over $900 by 2026 as more of their capacity growth comes online. That's about as bullish as a stock could be. And indeed, I see a fairly binary outcome. FSLR might languish if the outlook grows shaky, or it might indeed see the kind of growth forecasted here. Given how firm the current footing is, however, I see the latter as more likely. They have $12/share in net cash on their balance sheet and a robust backlog stretching into 2030 at margins far above peers ....
Read the full article on Seeking Alpha
For further details see:
First Solar: Potential Reward Outweighs Risks