Re : First Solar Outlook Sunny Despite Dismal Run
yalanand
6/11/2011 1:05:25 AM
Steven,
No doubt, this is one of the best stock picks but the important questions is Dow below 12k is it the right time to enter this stock or wait till market bottoms out ?
Re: Re : First Solar Outlook Sunny Despite Dismal Run
Steven N. Czetli
6/11/2011 2:04:59 AM
Good question, but since I am neither a professional money manager nor an expert in the solar sector, I can't give you a good answer. I can tell you that one analyst not quoted in the story sees it hitting $130-$150 by yearend. I can also add that the solar sector is volatile by nature, so who is to say it will follow the market? The company's fundementals seem to have its observers bullish. I asked several managers if a split was forthcoming to open it up to more non-institutional investors, but nobody seemed to get very excited about my speculation even though First Solar's share price is substantially higher than comparable public players. Mr. Arcaro, who was generally positive about the stock-- despite giving it a "hold" rating -- pointed out the importance of weather to First Solar's earnings, citing an unusually harsh winter in Germany as contributing to the company's recent decline in earnings. I guess what this boils down to is that I see more important variables with FSLR than overall market sentiment. But perhaps a more expert reader can give you a more expert answer.
Steve
Go green
Phoenix
6/11/2011 11:27:33 AM
It is good to hear that green energy is receiving attention in the market place. I'm not sure about whether it is a good time to buy the stock but it sure has a good future. I think most people want to go green.
Nuclear energy is not looking good presently with the crisis situation in Japan and Germany planning to close plants. So solar energy as an alternative source looks better and better.
Which company do you think will do better in the long run, First Solar or GT Solar?
Since I'm not a licensed money manager, I don't think I should be recommending specific securities. I can say that the pros I talked to thought both companies were well run and had considerable upside. But think longterm either way you go. One analyst pointed out that natural gas is the energy source to compare solar to, as that's where we turn when coal needs a boost to satisfy grid demand -- the role he sees solar playing in the future.
Steve
Re: Go green
Phoenix
6/11/2011 11:50:27 AM
Thank you for your very prompt response. Yes it's difficult to predict. I agree energy sources like natural gas is also a good alternative source.
I feel once solar catches up with the emerging markets it might have a better chance at competing with oil. Specially in countries like India where you do get places where it's sunny all year round unlike in European markets like Germany. So Solar definitely has a good investment potential as a long term investment. What do you think?
Without a technical breakthrough, I don't see solar playing the role of coal; rather, I see it as supplemental. But that's no small thing as the demand for energy keeps rising and supplemental sources of energy will increasingly be needed. I think ultimately the solution will come from both ends: a variety of clean energy sources and more efficient machines, which is what is happening now, albeit too slowly. I'm no conspiracy theorist, but don't underestimate resistance from those short-sighted folks who have a lot to lose from going green.
Steve
Re: Go green
Phoenix
6/11/2011 12:42:25 PM
You are right Steve. Resistance to change is something that we are all going to face.
However, there are some positive developments happening now in most developing economies. I have seen solar power used as a source of heating in even countries like Sri Lanka. The set-up uses more copper piping for heating water etc. so it's more effective and cost beneficial. They are also made in Sri Lanka. They are different from the more expensive solar cells manufactured abroad. So with a bit of innovation from the energy companies to reduce costs and the countries themselves (to cater to their specific needs) solar energy does have a bright future.
Re: Go green
ProfR
6/13/2011 9:10:41 AM
Interesting about demand in developing countries. I think the question is how big is that market and can the manufacturers get to a cost point that makes solar more viable there.
I think the drop in revenue looks like a lot more than seasonality.
Re: Go green
Phoenix
6/13/2011 10:44:30 AM
The developing economies would require very economical and affordable solar solutions. I am not sure whether it will be cost effective to get into such markets. They might need to go for huge price cuts resulting in very low profit margins. It might be difficult to go for economies of scale by mass production because there is no established market there. People's minds are opening up to the possibilities and the concept of protecting the environment is also there. But when it comes to pure survival solar power might be seen as a luxury item because of the large initial installation cost.
The solution will be new innovative low cost products. As of now the solar powered copper pipe heating system manufacturers are still surviving after more than a decade in operation. So the market is sustainable for a good cost effective product.
Re: Go green
Scott
6/13/2011 8:39:38 PM
I agree that I find the seasonality thing a bit dubious. Is Q1 that much more wintery than the preceding Q4? Like, $42M more wintery? LOL But it does sound like the people at the wheel of this company unlike so many of these other sham green companies have their heads in the right place.
This is a relatively young company but one that has seen its share of economic hurdles; namely the dot-com boom and bust, the post-9/11 "nuclear winter" economy, and the 2008 financial crash. That it found market interest for its 2006 IPO is to its credit.
I see it as still a start-up, though. Could very well be a windfall but I wouldn't bet the store on it.
"First Solar makes its panels and modules with a less expensive process than most manufacturers, utilizing cadmium telluride (CdTe) as a semiconductor, instead of the more common crystalline silicon"
what do you sacrifice....expenses or efficiency? Which hurts the market the most? I would think that saving the money would allow them to spend more time with r&d to see why they can't be more efficient, but i guess not
The observers of First Solar that I spoke with pointed out that there are times when space is not a big issue and therefore price is more important than efficiency. Second, for a blog post such as this I didn't have room to explore their R&D efforts, which might be extensive. I just don't know. Even if it is not, they are focusing on remaining a leader in a particular market segment (described above) which seems to me a reasonable strategy.
Steve
Realistically, we are we going with solar? Is it really going to be the next big thing or is it just something to make us feel good, like reusable bags?
I don't know, but if you read the post closely, I think you'll see some comments from folks who might to the effect that solar will always be supplemental to something. Let's hope it's not coal or nuclear. Maybe something out of quantum physics. So no, I don't think it's going to be the next big thing unless we have an unexpected technological breakthrough. But I'm not a scientist.Thanks for your comment.
Steve
A lot of effort is going into building Concentrated Solar Power plants in the worlds's deserts. A 25 sq km facility of this type can produce about 50 MW of power. For comparison, the average coal power plant produces 667 MW of electricity. The output limitation for solar power means you have to look at the prospects for implementation very carefully.
Re: Sooo.
AskAsa
6/16/2011 10:48:35 AM
I wasn't aware of these differing technologies. It will be interesting to see how they pan out over time--whether the "better" product beats the "cheaper" one or visa versa. There never seems to be a clear correlation. Remember VHS and Betamax?
Look at the Price
AskAsa
6/30/2011 10:39:13 AM
Wow. Have you seen how this has climbed? First Solar Inc. rose 6.5% to $137.85 today (6/30) as the biggest gainer in early action among components of the S&P 500. The Department of Energy awarded $4.5 billion in loan guarantees to three big solar energy projects sponsored by First Solar.
The U.S. is offering a conditional commitment for a $680 million loan guarantee to support the Antelope Valley Solar Ranch 1 project, conditional commitments for partial loan guarantees of $1.9 billion in loans to support the Desert Sunlight project, and conditional commitments for partial loan guarantees of $1.9 billion in loans to support the Topaz Solar project. First Solar is building a new plant in Mesa, Ariz. and recently expanded its plant in Perrysburg, Ohio.
soaring price
Tenacious
6/30/2011 11:18:22 AM
Guess you were right Steve. The share price is trending up -- fast.
Check out SOLR. We started following it at $10
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