First Solar: A Low Beta Solar Play In An Extremely Volatile Sector

Jul. 18, 2021 5:58 PM ETFirst Solar, Inc. (FSLR)22 Comments
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Investing Hobo
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Summary

  • With 90% of its business this year and 70% of its shipments next year already booked, First Solar's earnings should be fairly set in stone with little room for deviation.
  • Due to fixed contracted pricing, First Solar could miss a big opportunity for margin expansion as peers are forced to raise pricing in order to compensate for higher input costs.
  • First Solar's conservatism will also likely limit upside potential should the industry rebound from its recent supply side constraints.
Close up array of thin film solar cells or amorphous silicon solar cells or photovoltaics in solar power plant turn up skyward absorb the sunlight from the sun
Airubon/iStock via Getty Images

The solar industry has garnered a lot of attention in recent years as the effects of climate change have become more noticeable. The hype and criticism over photovoltaics have also made the sector incredibly volatile. As a result, U.S. listed solar stocks have always

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Investing Hobo profile picture
3.25K Followers
I am generally a long term investor looking for macrotrends which I believe may play out over the course of several years. While I look at a lot of varying criteria in researching potential investments, I'm more aligned with the analytics involved with investing. Although it's not always a sureguard in shorter time frames, I believe over the longer course of time, valuations and earnings power always determine the path stocks trade. As such, I am value driven and look more at companies trading at discounts to growth rate and earnings power, especially if it's currently being discounted by the market. While I track many different industries, I'm currently have a China centric focus believing the long term macro trend of its population entering the middle class is in its early cycle. As China's gdp per capita increases, discretionary buying power among its middle class should increase at a higher exponential rate. As a result, larger well known companies are poised to profit from this cycle. In addition, I may focus much of my writing on the solar sector for a few key reasons. First the solar sector is widely misunderstood. Second, many companies which operate within the sector are extremely transparent in operating structure. Lastly and more importantly I believe in the longer term prospects for the industry because the economics can be justified when looking at longer trend patterns.

Disclosure: I/we have a beneficial long position in the shares of CSIQ, SPWR, MAXN, DQ, ENPH either through stock ownership, options, or other derivatives. 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.

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