Camden

Bargain of the Week: First Solar

Excellent article and some excellent replies. I think there valid argruments to be made on both sides. Whether or not FSLR is currently a good investment will depend on several factors mentioned above and some others, including:
1. It's ability to keep lowering it's cost/watt.
2. It's ability to maintain it's margins
3. How fast demand picks up for the solar industry as a whole
4. How fast the cost of producing polysilicon decreases
5. If the supply of polysilicon can keep up with demand (if it outpaces demand the price will fall to about production cost and stay there until demand picks up dramtically
6. The advancement of competing technologies
7. Passage of government legislation

My guess is that First Solar is likely to see it's margins compress as competition heats up. That will likely cause further PE compression. Earnings may increase without much increase in stock price. I've been invested in FSLR for most of the past three years and it's been a good ride. I suspect they will stay the leader (in terms of profits) for at least another two years due to long term contracts already in place if nothing else. Competitors have a LONG way to go to catch up. I'd also guess the future holds MUCH less annual stock price appreciation going forward. My stock position has been cut 75%. I need to see how this current situation plays out over the coming year before taking what I consider to be a "full" position again.

Cramer's Mad Money - Hey Apple: Chips Are Not a Commodity (4/30/09)

Re: "This will turn out to be a big deal."

I would add "... for Apple."

Of course how big a deal it becomes depends on Apple's ability to produce "more capable" chips in a timely, cost efficient manner.

Apple continues to up the ante for the competition. That bodes well for Apple and it's shareholders.


On May 01 09:46 AM Timeline Strategy Consulting wrote:

> Consider the context in which Apple operates. If they lack the capacity
> to design and fabricate their own chips, then they either: (1) subject
> themselves to whims of market pricing, long lead times, process runs
> of millions and millions of units; or (2) partner with, and pre-pay,
> a supplier who will dedicate capacity to Apple's specific needs.
>
>
> Either way, they are effectively held hostage by chipmaking capacity,
> which is theoretically able to be purchased by any company. In that
> sense it is a commodity.
>
> Apple is thinking many years ahead with this move. The basis of their
> strategy is that the separation between semiconductor and device
> manufacturers hurts product development cycles, as the device manufacturers
> are subject to the above dynamics. They will be able to design, produce,
> and test chips with extremely fast turnaround, and greatly speed
> the development cycle.
>
> This will turn out to be a big deal.

First Solar's Future: Bright or Dim?

I agree with the first comment. Stephen, you seem to be using the information that fits your thesis rather than all the information. Why do you assume FSLR's decline in stock price in the first quarter was an "increase in rationality" rather than the result of profit-taking and panic selling in a time of tremendous market turmoil?

Also, you say "it still makes no economic sense to choose solar over another power medium". Answer me this, does it more make economic sense to keep investing in energy sources that are depleting and rapidly increasing in cost per BTU, or ones that are renewable and are rapidly decreasing in cost per BTU? If we don't invest in future technologies we will never have them. Recent history suggests it is likely that First Solar's panels will very soon be priced at or near parity in cost per energy unit with the electric grid. I think it is only common sense to continue to invest in that future.

Investing in a Resource-Constrained World (Part IV)

The few minutes I spent reading half the post was a total wast of time.

Canadian Solar: Value Diamond in the Alt. Energy Rough

Jack, you've made a compelling case about why CSIQ is the safer stock investment based on valuation but I don't think you've made the case for why it is a better company or has better long term prospects. Sales growth over the last two years only looks backward. Do you have information on how CSIQ's signed contracts (backlog) compare with others like FSLR?

Renewable Energy: Approaching Grid Parity?

vboring,
Your handle suits your opinion. Your comment that "solar has only achieved grid parity in terms of cost in places with massive subsidies, only according to the most idealistic assumptions, and only in places with the worst power system management" is looking at the past. If you take the time to look forward you'll see that FSLR truly IS likely to be producing massive amounts of electricity (enough for MILLIONS of homes) at prices that are comparable to oil-fired generation WITHOUT subsidies in five years or less. True, coal will be cheaper. So what. The point Mr. Hodge was making is that all energy-producing technologies will be needed and solar and other alternative technologies are likely to gain an increasingly larger piece of the market as their costs come down. On that point he is, in my opinion, undeniably correct. Those that choose to keep their heads in a dark, dusty cave are unlikely to see the light.

First Solar: Terrific Earnings, But Enormous Multiple

Zachary, what do yo mean by "short the name in conjunction with a lower multiple stable competitor"? Are you suggesting shorting FSLR and another Solar company? Or, shorting FSLR and buying the stock of a lower multiple stable solar company?

I'd love to know your opinion on which companies constitute a "lower multiple stable competitor." Do they have to be profitable to be "stable"?

FSLR has put forth a long term business plan that will make it VERY difficult for any company to compete in their market. So far they have executed on that plan well above their own projections. So far there is no evidence that there business plan will not succeed. I'd say the wisest long term strategy would be to buy on dips and hold until the business plan cracks. Sure nimble traders MAY be able to get in and out at opportune times, but I think investors will be rewarded by this company that is without peer, has a huge backlog of contracts, is rapidly lowering it's cost of production and is in an industry segment that is still in it's infancy. The solar industry may well be 100X larger than it is today when I have to take money out of my IRA's in 18 years.

Six Stocks to Buy, Five Stocks to Short

InestLikeaPro
Congrats on your trading record! Fifteen straight years over 9% is amazing. I'd say that puts you in the top one-half of one percent of all investors. I can claim a very good 15 year record but had a loss in 2002.

1. I wasn't preaching, I was giving honest opinion based on 33 years on investment experience.
2. I happen to be a rather aggressive investor/trader. I rarely have less than 15 positions active and I'm currently up 42% YTD. Yes, the markets recent volatility hit my portfolio as well – I was up 50% a week ago.
3. I reiterate that someone that loses 22% of their portfolio on a day in which the indexes are down less than 4% IS gambling (or one of the world's worst traders).

Now I'll preach. Hate is a very destructive emotion. You'll likely live a better life if you can reduce it. Lighten up and learn to take others constructive criticism as a gift. There is often much to be learned from points of view that differ from your own.

Six Stocks to Buy, Five Stocks to Short

I appreciate your honesty in saying "The stock market has become too volatile to handle for many people, including me." I hope you will take the following as well-intended constructive criticism:

Anyone that loses over 20% of their portfolio's value in one day (especially a day with the indexes down less than 4%) should NOT be giving anyone financial advice. Heavy selling in two stocks gives you a 22% portfolio loss??? You shouldn't have a 22% loss even if Apple goes to zero. Clearly you are gambling, not investing properly.

Secondly, if you dread turning on CNBC because there is likely to be more bad news, you shouldn't be giving investment advice. It shows you are too emotionally immature to handle something as important as investment advice.
I hope you go on to get your finance degree and that it leads to a successful career. However at this time I sincerely suggest you do yourself and Seeking Alpha readers a favor by ceasing to write these "advice" articles. You are likely to make a make a fool of yourself and cost many impressionable young investors a great deal of money. All the best.

Six Stocks to Buy, Five Stocks to Short

I appreciate your honesty in saying "The stock market has become too volatile to handle for many people, including me." I hope you will take the following as well-intended constructive criticism:

Anyone that loses over 20% of their portfolio's value in one day (especially a day with the indexes down less than 4%) should NOT be giving anyone financial advice. Heavy selling in two stocks gives you a 22% portfolio loss??? You shouldn't have a 22% loss even if Apple goes to zero. Clearly you are gambling, not investing properly.

Secondly, if you dread turning on CNBC because there is likely to be more bad news, you shouldn't be giving investment advice. It shows you are too emotionally immature to handle something as important as investment advice.
I hope you go on to get your finance degree and that it leads to a successful career. However at this time I sincerely suggest you do yourself and Seeking Alpha readers a favor by ceasing to write these "advice" articles. You are likely to make a make a fool of yourself and cost many impressionable young investors a great deal of money. All the best.

Hot Solar Investment No One’s Talking About

Another thing. To say no one's talking about investing in silicon is also "just plain wrong". The shortage of polysilicon for making solar semiconductors has been a hot topic. There is one main supplier that is a public company – check out WFR. However there is more production coming on line from China so supply may catch up with demand in the not too distant future.

Hot Solar Investment No One’s Talking About

As GH pointed out FSLR does not even use silicon in their solar cells. This from the FSLR web site:

"Abundant raw CdTe material to support high volume production and demand.
CdTe is made by transforming cadmium and tellurium into a stable, inert semiconductor. Both elemental materials are produced as byproducts of mining processes (primarily zinc mining and copper refining) and present in abundant quantities to support multi-GWs of annual production"

Solar Stocks Go Nuts On Supply Agreements

"Are those gains justified? I have no idea. But if ever a sector looked frothy, this is it."

He has no idea if the gains are justified – but he's certain the sector is frothy. ???!!!