First Solar (NASDAQ:FSLR) is the often forgotten solar company, despite the fact that it's one of the biggest companies in the industry. But First Solar doesn't have the flashy business of SolarCity and hasn't yet launched one of the yieldcos that have captivated investors.

Yet, First Solar is quietly a highly profitable solar company with a long track record of success. Despite its near-term challenges, here's why I think First Solar stock will be a winner long-term.

Fslr Blythe Project

First Solar is one of the most efficient companies at building large solar projects like this one. Image source: First Solar.

Utility scale solar is still big business
Despite all of the attention residential solar has gotten in the past year 4,345 of 7,214 megawatts installed in the last six quarters was utility scale solar. This is exactly where First Solar operates, and it has among the lowest costs in the solar industry.

The good news is that utility projects have started to gain momentum as well. Between Dec. 31, 2013 and Aug. 5, 2014 the company shipped or built 700 megawatts of solar-power systems and added 1.2 gigawatts of backlog valued at $1.6 billion. The company also has 12.7 gigawatts of project opportunities in its pipeline around the world.

This is all despite having modules that are just 14% efficient, compared to over 21% for top competitors. But investment in new technology should improve First Solar's efficiency as well as its competitiveness going forward.

Fslr Project Image

Image source: First Solar.

Investment in technology should pay off
First Solar knows it has to improve efficiency to stay competitive and it has an aggressive technology plan to do just that. Management said earlier this year that by Q4 it would be running a fleet average efficiency of 14.9% and that would increase to 17.2% by the end of 2017.

If the company can execute on that plan it'll be ahead of the efficiency of commodity Chinese panels and still lower overall costs for large-scale projects.

Investors getting solid value in First Solar
Over the past year, First Solar has generated an impressive $376.8 million in net income, more than its competitors, despite the challenges I outlined above. Results can be lumpy depending on the quarter, but overall the company has remained solidly profitable.

Long-term, those profits should improve as the cost of solar energy falls below that of the electric grid around the world and First Solar improves efficiency to squeeze more out of every plant it builds. With that in mind, I think shares are fairly cheap at 18.7 times trailing net income.

Keep in mind that First Solar also has the flexibility to either sell future projects to investors or yieldcos, or form its own yieldco. As long as costs remain low and efficiency improves, First Solar owns a valuable position in the solar industry.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.