First Solar, Inc. - Burning Out?

Posted on Di 18 Dezember 2007 in misc • 2 min read

  • Stocks tags:
  • FSLR
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    I'm a believer in alternative energy sources such as wind, geothermal, and solar, but everyone jumping on the "alt energy" bandwagon has pushed some stocks to the moon. One these stocks, First Solar (FSLR), is burning a bit too bright for me and eventually it will burn out. Sure its a momentum play darling right now and its chart is a classic, but fundamentally it will burn out. When? I don't know but I wouldn't go near this stock with a 10 foot pole right now.

    Technically

    FSLR is a company that "designs and manufactures solar modules using a thin film semiconductor technology" and it's plain to see from the weekly chart that FSLR is on a trend upward right now. If I were playing this stock, I'd be looking for pullbacks on the daily chart to get long, like now. However, with any breakout or momentum play, you have to get in early to make money and its really hard to tell if we're in the beginning of a long trend or at the end of it right now.

    Fundamentally

    This is where I have the problem with FSLR. FSLR recently reported earnings and the 300+ PE ratio I wrote about before has now become 171. It's ROA and ROE is 14.5% and 18.5% respectively, revenue for the most recent quarter is $150.9 million, FWD PE is estimate at 127, and its PEG ratio is 4.0. The low ROA and ROE and a PEG ratio of 4.0 is what makes me want to stay away from it.

    Wow, everyone has high hopes for FSLR but I don't. That's not say that FSLR will have a bright future, but I seriously doubt it will be at price levels above $200!