Since April 9, First Solar (NASDAQ:FSLR) has been on a tear. The value of the company is up 73%, and it's currently trading at almost 46%. Those looking for an excuse may point to that date as one when the company announced it had set a new efficiency record on its Cadmium-Telluride, or CdTe, technology - 16.1%.
But you would be wiser simply to Google the company. A link to the home page says it all: "Vertically Integrated Utility Scale PV Power Solutions." This is not how the company is usually positioned in the public mind. To most people First Solar is just a panel maker, like the Chinese company. Never mind that its technology is not polysilicon, it's seen as a panel maker.
But as I noted nearly a year ago now, First Solar's strategy is no longer tied to selling panels. It's tied to building and selling projects. There are many advantages to utilities in buying solar projects. They get Renewable Energy Certificates, or RECs, which they can sell to their other energy customers as "green energy." They can also take advantage of FERC 890, a Department of Energy rule allowing for higher prices on energy storage. They can get fast depreciation on the costs, which provides a quick hit for the bottom line.
First Solar provides a full service for these utility companies. They make the panels, they handle the real estate problems, they deal with the states and other regulators, they build the projects, and they hand the utilities the keys so they can profit. The utilities then have the industry's back when ideologues or fossil fuel advocates try to cut down the requirements or cut the tax breaks.
It's a win-win-win.
The efficiency rise is not accompanied by an increase in prices. The prices, in fact, are continuing to fall across the industry. Import duties on Chinese panels, which were announced last year, actually won't take effect until the end of this year. But the prospect of them provides additional tailwinds to First Solar, which makes its product in both the U.S. and Malaysia.
So you have falling costs, a viable business model, the promise of grid parity, and coming duties against your Chinese competitors? Sounds like a buying opportunity. But if you see someone scaling one of the many new solar technologies being written up in the science press, sell.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.