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Why Shares of First Solar Gained 13.2% in June

By Travis Hoium - Jul 3, 2019 at 12:09PM

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The solar industry is hot once again.

What happened 

Shares of solar manufacturer First Solar ( FSLR -0.48% ) jumped 13.2% in June, according to data provided by S&P Global Market Intelligence, as the market got more bullish on solar energy. 

So what 

In June, the biggest news for First Solar, and the industry more broadly, was the Solar Market Insight Report 2019 Q2 that was released by the Solar Energy Industries Association (SEIA) and energy research firm Wood Mackenzie. The report showed a record amount of solar installed in the first quarter of the year, at 2,674 megawatts (MW), and installations are expected to grow 25% this year to 13,000 MW

Large solar farm in the desert built with First Solar panels.

Image source: First Solar.

First Solar isn't the only company that will benefit from higher solar installations, but it might have the most to gain. It has more domestic manufacturing than any other company, and its thin-film solar panels are exempt from solar tariffs. If that translates to higher demand and pricing, it could mean a great year operationally. 

Now what 

The bullish sentiment is really speculation that future revenue and earnings will be better than previously expected. But we haven't seen the operational improvement that's being priced in, and may not for a few more quarters. What investors will want to watch for in the rest of 2019 are signs that solar panel pricing is stabilizing, or rising, and backlog for future sales is growing. If both of those things happen, First Solar will continue its hot streak. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

First Solar, Inc. Stock Quote
First Solar, Inc.
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