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Company First Solar (Nasdaq: FSLR)
Submitted By: TSIF
Member Rating: 99.94
Submitted On: 10/13/2011
Stock Price at Underperform Recommendation: $57.64

Polypore International Profile

Star Rating **
Headquarters Tempe, Arizona
Industry Solar
Market Cap $4.42 billion
Industry Peers ReneSola (NYSE: SOL)
Yingli Green Energy (NYSE: YGE)
JinkoSolar (NYSE: JKS)

Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.

This week's pitch :

I've been pitching many Solar stocks up, (although I'm mostly losing) as they enter uncharted fresh bottoms territory. I think [LDK Solar (NYSE: LDK)], [JA Solar (Nasdaq: JASO)], and a few others have some potential at the low levels, or at least the risk mitigated somewhat.

First Solar, however, has been so loved by analysts that while it's valuation in the mid-$50's is reasonably "fair", it's valued at 5 to 6X its China based peers. While investments in China have some risks [because of] transparency and government intervention, China has been propping up its solar industry while the US [lets its] decay. US Analysts have been propping up the US Solars even though they can't compete on cost. They can compete somewhat on a service basis, but selling panels short and making some back on the service/installation is a limited business model.

Overall, I think Solar, subsidies or not, is starting to catch on. I see solar panels sprouting on many rooftop, in grid arrays, and on construction signs. Overall, however, the competition is fierce and while US loyalty may help, it's all about the pricing at this point.

[In\ this case, both fundamentally, and certainly technically First Solar, even at 70% off [its 52-week] high, has more to shed. The demand needs to meet capacity and until it does, the lower priced players have the edge. Revenue YoY is down over 35% and income by 65%. Breakeven isn't far away.

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