What happened
Shares of First Solar (FSLR +1.15%) rocketed 81.8% in 2020, according to data provided by S&P Global Market Intelligence. Several catalysts powered the solar energy stock's surge last year.
So what
First Solar generated strong financial results in 2020 despite the impact of the COVID-19 pandemic. The company sold more than $2 billion worth of solar systems through the third quarter, up more than 26% compared to the prior-year period. Meanwhile, it reversed a prior-year loss of more than $55 million by generating over $282 million of net income through the third quarter.
Image source: Getty Images.
The company also operated effectively, utilizing more than 100% of its nameplate manufacturing capacity during the third quarter and booking significant new orders to bolster its backlog. The company also maintained a top-tier financial profile, ending the third quarter with $1.4 billion of net cash.
Meanwhile, the U.S. election outcome buoyed hope for even better days ahead for the solar industry. With Democrats retaining control of the House, winning the White House, and projected to win the Senate (as of the publication time of this article), they'll likely pass legislation favoring renewable energy. The U.S. Congress already extended an investment tax credit for solar energy for two years and could pass new legislation to spur additional solar energy development. That would boost demand for solar panels, potentially powering faster growth for First Solar.
Now what
Solar energy is just starting to shine. Thanks to years of falling costs, it's now as cheap as fossil fuels and is on track to become the lowest cost form of bulk power in a few years even after adding in battery storage. Because of that, solar energy was already on pace to accelerate over the next decade without any legislative help. Now with that additional boost more likely, companies like First Solar could grow faster in the coming years, potentially giving their stocks more power to soar.
