First Solar is officially headquartered in Phoenix, but the company employs nearly 600 people, including some high tech jobs, at its U.S. manufacturing base and design center, located in Perrysburg Township.
Excerpts from a Jan 14, 2008 article by a Motley Fool contributing writer :
My interest in environmentalism long predates the current craze. First Solar should be right up my alley. So why isn't it? For one thing, I've heard it all before. While I hope that the shift to greener energy does take hold in society, I've seen/heard the "this time is different" arguments before. I'll posit another hypothesis: The true shift to green tech will be a longer-term megatrend, driven by economic arguments rather than social appeals. It'll take decades to happen, and its path will be strewn with the financial ruins of thousands of unfortunate companies and investors.
No matter how much I appreciate companies like First Solar, and no matter how strongly I believe that we must shift to solar energy as quickly as possible -- and we're still talking decades here, folks -- we absolutely must divorce this business from its stock.
Cold financial logic tells us that First Solar, selling at near 50 times sales, and nearly 200 times EBITDA, is insanely priced. "But it's all about the growth and the opportunity!" the faithful will cry. Certainly, year-over-year revenue growth of 271% looks tantalizing -- perhaps too tantalizing. That growth comes off a very small base, and it will slow down going forward.
Quick calculations suggest that First Solar would need nearly a decade of more "modest" 50% annual growth at a 30% operating margin to justify today's stock price. In other words, making any sort of return on your investment would require even more optimistic growth assumptions. Moreover, First Solar faces key raw-material risks that could curtail growth, crimp margins, and crush share value.
Never confuse a business with its stock, especially when that business's mission appeals to your altruistic nature. I think First Solar is just one quarter of disappointing growth away from being the worst stock for 2008.
From the First Solar stock page at Motley Fool :
"Will this stock outperform or underperform the S&P 500?"
What the Community Thinks
- Total Players
- 1047 Outperforms
- 485 Underperforms
- All-Stars
- 271 Outperforms
- 171 Underperforms
- Wall Street
- 14 Outperforms
- 0 Underperforms
Top Bull Pitch : "Every time Al Gore speaks about Global Warming, or other well known Democrats, this stock takes off- like it or not, the Demo's are on the way in.....gotta roll the dice & stick with this one."
Top Bear Pitch : "I generally stay away from valuation shorts, but I just can't resist, at more than 100× 2008 projected earnings."
At the close of trading on Jan 16, 2008, First Solar was priced at $181.56, down $23.23 (-11.34%) for the day.
Jan 16, 2008 First Solar-related news :
- Solar stocks fell as oil prices pulled back to near $90 a barrel on economic concerns, leaving the Energy-Other industry group down 5%. First Solar FSLR crumbled 23.23 to 181.56, also on huge volume. That punched the stock deeper below its 50-day moving average, and left it 36% below its Dec. 27 high.
- Pacific Growth Equities upgraded [First Solar] stock Wednesday from neutral to buy, but First Solar and the rest of its class sank anyhow. First Solar shares hit $283 Dec. 27, and have been waning since.
- The solar sector has been hurting since a federal energy bill was passed last month without including an extension or upgrade of existing solar-power tax incentives. Some analysts expect Congress to revisit solar incentives in separate bills this year. Others say it will affect the sector little because individual states have their own incentive packages and global demand remains strong. Still, the psychological effect has hurt the sector's stock values overall.
- Pacific Growth Equities analyst Michael Horwitz upgraded First Solar Inc. to "Buy" from "Neutral," citing its "its scale, its well articulated and achievable cost cutting strategy, a tight polysilicon market, and its recent acquisition of DT Solar."
It might be because it uses highly toxic materials, whose potentially catastrophic (for the company) downside is still under investigation.
http://en.wikipedia.org/wiki/Cadmium_telluride#Toxicity
And there are companies going the more benign long-term route.
Here's one of the competing technologies.
http://en.wikipedia.org/wiki/Copper_indium_gallium_selenide
I still think biofuels (plants are pretty good at converting sunlight into energy safely and efficiently) and wind turbines make more sense.
posted by charlatan on Jan 17, 2008 at 02:53:07 pm #