First Solar Inc. (NASDAQ: FSLR)

First Solar Inc. (FSLR) develops, designs, manufactures and markets solar electric power modules.  Its thin-film semiconductor technology is proprietary, employing thin layer of cadmium telluride semiconductors to convert sunlight into electricity.  In a joint venture with EDF Energies Nouvelles S.A., the Company designs and engages in commercial solar projects in the United States and Europe.

Founded in 1999, the Company is headquartered in Tempe, Arizona.

Source: Reuters.com, SEC Filings.

Financial Summary

Source: Reuters.com

Analyst Consensus

The mean of 34 analysts polled by Thomson Reuters rate shares of FSLR a “Outperform.”  The details of the analysts polled are as follows:

Analyst Recommendations and Revisions

Source: Reuters.com

Investment Highlights

Overview

FSLR develops, designs, manufactures and markets solar electric power modules.  Its thin-film semiconductor technology is proprietary, employing a thin layer of cadmium telluride semiconductors to convert sunlight into electricity.  In a joint venture with EDF Energies Nouvelles S.A., the Company designs and engages in commercial solar projects in the United States and Europe.

Market

The market for photovoltaics (PV) reached nearly $20 billion in 2008, with estimates of a total market size reaching $34 billion by 2013.  The rapid growth in this sector presents varied opportunities, as the direction of this sector is expected to continue indefinitely at varying rates of growth.

Initially, the most likely leading consumer of PV technology will come from commercial and public entities, as the economic advantages of PV is of paramount concern of stockholders, as well as to state and municipal government officials struggling with static or shrinking budgets.

Market growth is dependent upon PV per watt unit costs and the price of competing energy sources.  PV technology is very attractive as an alternative to traditionally produced electricity as higher oil price levels are achieved, which has driven a flood of new investment into PV during most of this decade.   With increasing government-sanctioned programs, tax cuts, grants, better overall returns on investment capital are expected to facilitate rapid consumer acceptance and adoption of PV technology.

The Company’s ability to grow its business track investor investment flow and the spot price of oil and natural gas, which exploded to $147 per barrel of oil and $13.5 per mcf (million cubic feet) of natural gas in late June of 2008, then dropped to $35 per barrel and $3.50 per mcf, respectively, in December.  Since December, oil recovered to $69+ per barrel, while natural gas is now expected to reach $5 to $6 per mcf by the end of 2009.  Correlation analysis reveals as the price of spot oil and natural gas rise, investment volume into solar technologies and stock prices also rise.  Publicly traded solar companies rallied strongly in 2008 during the strong move up in the price of oil, and conversely dropped along with the spot price of fossil fuels.

Since capital formation of the PV market is correlated strongly to fossil fuels prices, factors affecting oil and natural gas price are important considerations in an investment into any alternative fuels enterprise.  Therefore, factors affecting the prices of fossil fuels play the largest role in the success of alternative energy sources, including PV technologies.

Energy analysts cite the post-June 2008 plunge and subsequent oversold condition in oil and gas prices to panic liquidation of contracts by hedge fund managers during the credit and liquidity crisis, which began in earnest in September of 2008.  However, as the global economy stabilizes, the spot price of coal, oil and its popular substitute, natural gas, are expected to firm, according to the Energy Information Administration (EIA).

Other private analysts such as Matt Simmons of Simmons & Company, and William Powers of Powers Energy Investor, hold more optimist price levels of oil and natural gas prices, citing evidence of world peak oil production and expected increased demand as world GDP begins to regain its upward projection.  Consumer and investor demand for alternative energy sources will rise significantly as a result of the dis-functioning dynamics expected in the oil and natural gas market early next year.  PV will play a significant role in the public and private shift toward alternative fuel solutions during ever decreasing inventories of oil.

Global production remains a key driver of fossil fuels prices and alternative energy investment, with production in both OECD and ASEAN countries weighing heavily on total world production outputs.  Most economists expect a rebound in durable goods production in Asia, especially China.  China’s real GDP growth is expected to reach 8% in 2010, officially, while GDP growth in the OECD countries is anticipated to be flat or rise slightly.  Since the demand for energy correlates strongly with overall economic activity, oil and natural gas prices may continue higher as excess inventories are depleted and diminishing new supplies struggle to satisfy this demand sometime in 2010, according to the Energy Information Administration (EIA).  Increased investment in PV technologies is expected to follow GDP growth, which affect fossil fuels prices and demand for alternatives.

The nature of most transactions made in the oil market is another bullish factor affecting investment into alternative energy technologies such as PV.  Since the majority of transactions for oil are conducted in the U.S. dollar, the anticipated continuation of the dollar’s decline will attract hedge funds and institutions into purchasing oil and natural gas as a currency hedge to further declines in the Greenback.  As the dollar reaches record lows on the USD Index, oil and natural gas prices were reaching record highs.  A re-test of the lows of the U.S. dollar increases demand from institutional and hedge fund managers for oil and natural gas, as these markets are the deepest and most liquid in the commodities space.  The PV sector will be among many beneficiaries of the bear market in U.S. Dollar.

The Short Term

Presently, the supply/demand fundamentals for the industry are unfavorable to producers of PV panels.

Globally, the demand for panels has dropped significantly following the initial surge earlier in the decade.  The cost of producing electricity from PV is approximately four times more than power derived from natural gas.  Natural gas prices must rise significantly from current levels to move private industry toward PV solutions.  Government initiatives to deploy PV panels have supported the solar market through conversions and investment in utilities’ increasing usage of solar power.

The supply of solar panel capacity reached 9,000 megawatts in 2008, while demand contracted to approximately 6,000 megawatts during the same time.  Industry analysts expect this supply/demand imbalance to continue through 2012.

FSLR is a leader in the PV market, and should be a primary beneficiary of government-sponsored programs which has significantly supported the industry.  Until renewed world GDP growth puts intense upward pressure on fossil fuels prices, meaningful demand from the private sector remains weak.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui?s=fslr
FSLR trades above its 13-day moving average. This bullish sign is significant because the moving average are also positively trending.

The MACD for FSLR currently indicates a bullish signal.  The MACD is above the signal line, a 9-day moving average of the MACD.  The MACD is also below, however, the critical level of 0, which implies the past price action had been negative.  Overall, the chart is neutral.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Data provided by Thomson Financial

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

• Need fast service and cheap rates from a broker? Buy stock online at my favorite brokerage
• See today’s top stock picks and market analysis
• Want more? Check out the message board buzz for these stocks
• See what newsletters are recommending these stock picks
• Get breaking news alerts on these stocks: http://thestockmarketwatch.com/
• This newsletter has been helping traders make a killing on these stocks. Click here for a 25% discount offer.

About BeaconEquity.com

BeaconEquity.com is committed to producing the highest-quality insight and analysis of small-cap stocks, emerging technology stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily OTC stocks in the stock market today, which have traditionally been shunned by Wall Street. We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Beacon Equity Group Disclaimer

This newsletter is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Beaconequity.com is a wholly-owned subsidiary of BlueWave Advisors.

While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.