solar jim

First Solar Cheaper Than SunPower - Citi

I love comments like Verity's. Absolutely nothing other than bias (short that is). What's your logic, reasoning, or facts to support that statement?

FSLR is actually finishing their plant expansions faster than initially planned and talked about and the ramp is going faster and quicker each plant as well. So considering they will have just about or over 1 Gw in yearly production capacity at end of next year I'm interested to hear how they are going to 'fail'. Everything they do they deliver better than initially projected, which means you have an interesting idea of failure.

Just as they have long term contracts to deliver panels to customers they have contracts to get delivered to them a bunch of tellerium on a long term basis. Anyone who uses the Te argument and tight supply is a dumbass. It's called a long term contract for delivery of the element needed in supply to meet the long term contracts they have to make panels. Tough, I know, to actually do a few minutes of investigation, but very much worth it.

Solar Cycles and Stocks: The Sun Also Rises

the problem with the chinese companies is that if there is a bear market for cells as the article contemplates, they are completely average, they have nothing to differentiate themselves from all the other silicon "non thin film" cell makers. They have average conversion efficiency of about 16% while SPWR is getting ready to roll out a 23% efficiency cell.

In opposition to many types of manufacturing, solar doesn't take all that much labor in the form of people. Its a small part of the total cost equation meaning China doesn't enjoy this huge advantage like they do in textiles or other labor intensive industries.

Solar panels weigh a good bit. Shipping from China, at these oil prices, increases the cost and it becomes harder to maintain any cost advantage.

And the idea that AMAT is going to do anything is laughable. Maybe in ten years. They sell undifferentiated equipment, which was an adaptation of chip gear. I believe that proprietary technologies and equipment are going to do better (FSLR, ENER, Nanosolar), otherwise they would already be buying AMAT equipment instead of continuing to expand with their own technology.

SEPA Report Showing End-Market Demand Disconnect Could Sink First Solar, SunPower

whoever was talking up TSL on labor costs doesn't really understand solar. The panel producers are mostly automated with very little labor. What lower labor costs exist in China are not enough to offset the lower technological capability of their pv panels on conversion efficiency and also total cost.

Senate May Kill Solar Rally

FSLR is already looking at nonsubsidized markets that they can compete in right now and make a profit. While the tax credit would help expand business and scale at a faster pace it will happen nonetheless although at a slower pace to grid parity if it does not pass. The U.S. isn't the only market either. The other markets in the world as well as individual states (ie CA) have enough incentives in place for enough years under already passed law to allow at least a couple of the solar players to expand capacity and the market to a size that they can compete without any subsidy anywhere in by 2011-2012, if not sooner. And that's without considering the passage of some sort of tax on carbon making all current cheap energy not cheap anymore with a future McCain/Obama/Clinton administration as they all are on the global warming bus together.

Major Corporate Shift to Solar Energy and LEDs

I love how some people always feel a need to print Gore's name in all uppercase "ALGORE". Tells you everything you need to know.

Further Musings on Solar Stocks

I consider fundamental analysis to be similar to einsteinian physics. With physics it works perfect for 99%+ of the situations until you get to the very very small where quantum effects take over and the rules you've been using don't work anymore and break down. Fundamental analysis is simlar, I believe, when using it on young industries that are not close to being mature slower grwoing companies yet.

Further Musings on Solar Stocks

Hey Jack,

If solar were a more mature industry I don't think I would have any issue with anything you've mentioned above. The only mistake I think you may be making is in applying good and very solid fundamental analysis on an industry that is still in, for the most part, hyper growth mode at the early part of its lifetime.

Another function of p/e spreads within an industry relates to the markets belief of risk for each company to execute and earn the projected revenue/earnings going forward. Companies in China are harder to ascertain whether the news is actuality, as well as having less news/releases, and so they therefore generally have lower p/e's than western based companies that other than location are exactly the same.

I would argue with your assessment of FSLR and the others being no different. In fact, there is quite a bit of difference. FSLR has a higher profit margin than all the other solar companies. They have already presold 70% of all the panels they will make through 2012, which includes all the currently announced factory expansions taking them to 1 Gigawatt per year by around mid 09. Except for FSLR, all the ones mentioned above use silicon and as far as I know they all make them they same way in that its a slightly modified version of CPU chip making with many less steps than CPU chips, but still lots more time/work to create that wafer of cells than FSLR takes. FSLR is automated continuous line. They've been increasing the Mw run rate of each line each quarter. Even if another company were to start doing thin film with CdTe they would have to find a different way as FSLR's line tech is proprietary and they have intellectual property on that. Most of the other companies buy stock solar equipment from manufacturers.

If you're looking at companies that all use stock solar equipment than I agree with you exactly on selling whatever the higher p/e stock is and buying the lowest p/e stock because they are the same - apples to apples. So while FSLR does have a high p/e it should have a higher p/e due to their tech position over those that aren't innovating at the edge. I'm not justifying the current price or saying it deserves to be higher, but I do believe it should have a premium to the others due to its position. That may change going forward, but right now, they are the clear leader and will be for at least another few years. Of course, what premium they should receive is open to debate. Going forward, I do not expect to continue to see a premium of 100%+ to the average of the field.

Trina Solar: Best Value in the Solar Space

I don't have any real disagreements with what you are saying. the PEG ratio is usually a large consideration for me with regard to buying equities. However, I do have a little different philosophy on whether the FSLR you mentioned is truly overvalued. I think the PEG ratio is a better analysis tool when looking at more mature companies, or at least companies that are the same in that they make their product/revenue by the exact same process - say VISA vs MA - with the only difference being execution or business practices therefore it makes sense to buy the undervalued one of the two, or however many are in your set.

Without discussing or debating the prospects of FSLR's revenue/earnings growth rate and whether it merits the current 2008 p/e I would first point out that "analysts" havn't been correct on this company once since the very first qtr as a public company. Considering the percentage amount that the company has managed to beat "analysts" projected earnings every quarter to date I think it is prudent to realize that the current 2008 p/e for FSLR, and some of the other higher priced stocks (on p/e 2008 ratio) are only correct so long as the "analysts" are correct this time. While this doesn't bring the PEG ratio to TSL levels or any of the China based solar plays, it would lower it.

First Solar, Sunpower Likely to Be Added to the Nasdaq 100 This Month

And how exactly does having the lowest cost per watt in the industry regardless of type of substrate used, as FSLR does, influence your decision on how badly FSLR's technology "sucks", considering that they do have the lowest cost basis per watt of energy produced.

First Solar, Sunpower Likely to Be Added to the Nasdaq 100 This Month

Here we go again. Another post that is pure opinion. Hey, User 128398, are you sure you're not really Mark Anthony? Here's an idea, rather than just spit out that something "sucks", actually explain why it isn't the best. How about some, you know, data. This is what logical people do, look at data and extrapolate to a specific conclusion, or a future point. Since you've apparently already talked to these "experts" in the solar industry, why not save us some time and effort and actually post a link to these "experts" and/or actually sprinkle some of their wisdom into your posts rather than pure opinion with absolutely nothing to back up your assertion.

First Solar, Sunpower Likely to Be Added to the Nasdaq 100 This Month

Enter your comment hereAnother reason analysts generally run behind new(er) growth companies is that it's not as important (as an analyst) that you were wrong estimating growth of the company rather than how wrong you were versus the rest of the analysts. As long as all the analysts under estimate future growth the same then they come out and say how unexpectedly well they company did over expectations, even though the company generally has said they will do that amount in conference calls. By being conservative, it is then a company outperforming rather than analysts being phenomanally wrong on the actual state of the business. I know someone that works at Cowen & Co. as a stock analyst and we have had this discussion multiple times. The result is that analysts are always more conservative than the company estimates. So wqhen you find a company that does UPOD (Under Promise Over Deliver) as FSLR has, you got a good bet that the analysts are going to continue to be behind this one for quite some time to come.

First Solar, Sunpower Likely to Be Added to the Nasdaq 100 This Month

Here's an item I saw on the Internet today regarding FSLR. The interesting item here was the 2010 earnings estiamte they put on FSLR of $7.25/share. Considering past performance of not only the company, but the lag time from analysts trying to catch up, this estimate seems to very beateable in 2010 based on previous performance of trying to gauge this companies profitablility. The item from the internet page follows below...

Analyst Sanjay Shrestha of Lazard Capital Markets is sticking with his Buy ratings this morning on shares of First Solar (NASDAQ:FSLR) and Capstone Turbine (NASDAQ:CPST).

On First Solar (NASDAQ:FSLR):

We maintain our BUY rating on First Solar shares following the company's analyst day and tour of the company's Perrysburg, Ohio, manufacturing facility.... elaborated on its overall strategy to garner leading and defendable market share in the mainstream electric power generating market, without subsidy, while maintaining a superior return on capital through people, processes, technological leadership, scale, strong financial discipline, and risk control..... reiterated its cost-reduction goal of achieving module ASP of $1-$1.25/watt by 2010-2012.
Shrestha adds, "We believe this strategy will allow First Solar to successfully migrate from subsidized markets, to renewable energy markets, to mainstream electric power markets over the next several years.... We are raising our price target to $250 from $225. Our new target equates to a 40x multiple on our 2010E EPS of $7.25 (up from $6.50), discounted back 15% for one year.

First Solar, Sunpower Likely to Be Added to the Nasdaq 100 This Month

I do remember that fact (not profitable til 2008). Although from my recollection that was analysts estimates, not the company. The analysts have been behind on this one from the first quarter as a public company and that has continued to today. As for the increased throughput being priced in already - I agree. I was simply trying to illustrate that increases in annual production capacity can be achieved without having to actually build a new plant. It can happen through increased conversion efficiency, increased throughput (speed of the line), solutions to previous bottlenecks in the chain of production, etc... Building a new plant is pure gravy right now considering they are advancing on all the other fronts continuously as well.

First Solar, Sunpower Likely to Be Added to the Nasdaq 100 This Month

Seeing SPWR added would be a nice development. I agree, getting into one of the index's is usually a free ride. It also acts, generally, to remove some of the volatility that a stock may have been exhibiting prior to being added to the index. All in all, a very solid move should that come to pass for either FSLR or SPWR.

Although some people were apparently dissapointed with FSLR's analyst day as they did not announce a new expansion I think people weren't paying attention. They increased the per line throughput from 30Mw per line in the 2nd qtr to 39.6Mw in the 3rd qtr. That's over a 30% capacity expansion right there without adding any plants, yet it's the equivalent of adding two to three plants with four lines. They already had announced expansion to total around 700Mw in 2009. Now that's close to 1 Gigawatt without adding any new plants based on increasing from 30 to 39.6 per line. Not bad. Not bad at all.

Mark Anthony, where are you? I know you're somewhere around here. I'm surprised you haven't spammed this post yet with your Te "chicken little" panic routine.

The Solar Sector: Tomorrow’s Winners Today

Enter your comment hereLet's try another way at looking at this chart above in the original article. FSLR has diluted earnings reported of $1.35/share by GOOG finance on trailing twelve months. This is after the 3rd qtr of reported earnings. But again, do you buy a stock based on what they've done, or what they will do in the future. Anyone who has watched the market for a long enough time to see a cycle or two, knows that the market is a forward looking mechanism and the past is not at all as important as what you say you will do going forward. It's a game of "what have you done for me lately"?

Consider the above table in the orginal article. Now that we are one more qtrs data forward from when this tables data was collected (I assume it was based on data through the 2nd qtr of 2007) it is interesting to see the updated results for FSLR at the very least. FSLR had diluted earnings of $.49/share for the last qtr. That put's them at a diluted earnings per share of $1.35 for a trailing 12 month p/e of 141, which is much much less than the 185.59 p/e indicated in the above chart. Considering the price of FSLR on the day the article was writtten, or $155/share, that indicates a p/e of 115. This indicates a one qtr decrease differential of 36% based on one qtrs of earnings. So after you do the math on the other companies after releasing preetty much in line numbers it is easy to see that while FSLR or SPWR may still be more expensive, the differential between a FSLR/SPWR and the also rans is getting much closer due to the fact that the FSLR/SPWR combo is increasing earnings, whether pro forma or diluted, faster than the rest of the bunch. Which leads me into the very reason that they are valued higher than the other, they are better and make more money. It's as simple as that.