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First Solar Lets The Sun Shine In For '09
In the old sixties song "Aquarius", a refrain sang "Let the sun shine in" - part of the hippie culture that was supposed to usher in the new "Age of Aquarius", which would see everything from the advent of a new era of peace and love to humans treating our planet in a more eco-friendly manner. Enter renewable energy such as wind, water and solar. While the human species has gone about business as usual with wars and the continued heavy use of fossil fuels, renewable energy has been slow to come on the scene as a viable business. With the ups and downs in the solar industry, many wonder if its time to flourish will ever come. (To learn more about the solar industry, be sure to read Spotlight On The Solar Industry.)
First Solar Not First But Best?
Fast forward nearly a half century after the sixties. Alternative energy and eco-friendly ways to live have received widespread media play, yet we are just now seeing the development of these energies as technologies, most of which are still on the fringe of mainstream energy production and use. Five-year-old First Solar (Nasdaq:FSLR) has tried to turn this dream not only into a reality, but a viable business model with potential for vast growth. First Solar's self-appointed mission has been not only to produce the technology to capture solar energy, but to be the low-cost producer. With its thin-cell film solar collector, contrasted with the rest of the fledgling industry's use of large flat-panel collectors, First Solar has produced a positive income stream in two of its last four years. Its competitors, such as Evergreen Solar (Nasdaq:ESLR) and Sun Power (Nasdaq:SPWRB), seem to be behind the curve on this, although Sun Tech (NYSE:STP) has shown consistent profits.
The Sun Is Constant, Solar Business Is Not
While astronomically our sun is dynamic and changing, from our limited perspective here in human lifetimes, it seems amazingly constant. The energy (light) travels 93 million miles to earth in 8.5 minutes - necessary, ready and available to sustain life. The solar power business, however, hasn't been anything like that with its gyrations, cost questions and up-in-the-air direction of companies' futures. The difficulty this year was the cost of polysilicon, an important ingredient in making solar collectors. Add in macro-economic conditions, in which routinely new or experimental technologies fare poorly, and the business and stocks understandably experienced tremendous volatility. First Solar's stock ranged from $85 to above $300.
Solar, A Measure Of Vision Plus Practicality
Enter this fray of the economy, as well as the uncertainty of how to deliver renewable energy technology in a cost-effective way, and to make a profit for the solar energy companies, First Solar has consistently shined brightly. Its earnings have shown a dramatic upward surge from losses of $17 million and $6 million in 2004 and 2005 to profits of $4 million and $158 million in 2006 and 2007. Projections for the fiscal year end, due to be reported in late February, look for $3.91 EPS versus $1.94 the previous year, $1.33 vs. 53 cents for the quarter year-over-year, and a staggering $7.29 per share for 2009. This, in the face of current economic conditions.
Solar, A Bull With A Long Tail
While traders may wax and wane on solar energy industry fortunes, long-term the industry is here to stay, especially leading companies like First Solar. Even if you take a more modest growth rate as a projection for First Solar, the implications are clear. While the review of solar's performance as a business and its stocks was mixed in 2008, the long-term secular trend is that solar will continue to grow, perhaps profoundly. The technologies, led by such aggressive innovators as First Solar, will continue to improve, and the seemingly insatiable global demand for energy may be answered more routinely by what were once considered alternative (if not hippie) visions of technology. The recent development of installing solar in residential housing, not just industry, is a fascinating portent of things to come.
So, look to the sun to sustain us as it always has, but in new ways. Solar shines brightly as an investment in the future, yet it's available now.
Be sure to check out our special feature Green Investing to learn more about how corporations and investors alike are making and saving money by adopting green or environmentally friendly energy sources.
First Solar Not First But Best?
Fast forward nearly a half century after the sixties. Alternative energy and eco-friendly ways to live have received widespread media play, yet we are just now seeing the development of these energies as technologies, most of which are still on the fringe of mainstream energy production and use. Five-year-old First Solar (Nasdaq:FSLR) has tried to turn this dream not only into a reality, but a viable business model with potential for vast growth. First Solar's self-appointed mission has been not only to produce the technology to capture solar energy, but to be the low-cost producer. With its thin-cell film solar collector, contrasted with the rest of the fledgling industry's use of large flat-panel collectors, First Solar has produced a positive income stream in two of its last four years. Its competitors, such as Evergreen Solar (Nasdaq:ESLR) and Sun Power (Nasdaq:SPWRB), seem to be behind the curve on this, although Sun Tech (NYSE:STP) has shown consistent profits.
The Sun Is Constant, Solar Business Is Not
While astronomically our sun is dynamic and changing, from our limited perspective here in human lifetimes, it seems amazingly constant. The energy (light) travels 93 million miles to earth in 8.5 minutes - necessary, ready and available to sustain life. The solar power business, however, hasn't been anything like that with its gyrations, cost questions and up-in-the-air direction of companies' futures. The difficulty this year was the cost of polysilicon, an important ingredient in making solar collectors. Add in macro-economic conditions, in which routinely new or experimental technologies fare poorly, and the business and stocks understandably experienced tremendous volatility. First Solar's stock ranged from $85 to above $300.
Solar, A Measure Of Vision Plus Practicality
Enter this fray of the economy, as well as the uncertainty of how to deliver renewable energy technology in a cost-effective way, and to make a profit for the solar energy companies, First Solar has consistently shined brightly. Its earnings have shown a dramatic upward surge from losses of $17 million and $6 million in 2004 and 2005 to profits of $4 million and $158 million in 2006 and 2007. Projections for the fiscal year end, due to be reported in late February, look for $3.91 EPS versus $1.94 the previous year, $1.33 vs. 53 cents for the quarter year-over-year, and a staggering $7.29 per share for 2009. This, in the face of current economic conditions.
While traders may wax and wane on solar energy industry fortunes, long-term the industry is here to stay, especially leading companies like First Solar. Even if you take a more modest growth rate as a projection for First Solar, the implications are clear. While the review of solar's performance as a business and its stocks was mixed in 2008, the long-term secular trend is that solar will continue to grow, perhaps profoundly. The technologies, led by such aggressive innovators as First Solar, will continue to improve, and the seemingly insatiable global demand for energy may be answered more routinely by what were once considered alternative (if not hippie) visions of technology. The recent development of installing solar in residential housing, not just industry, is a fascinating portent of things to come.
So, look to the sun to sustain us as it always has, but in new ways. Solar shines brightly as an investment in the future, yet it's available now.
Be sure to check out our special feature Green Investing to learn more about how corporations and investors alike are making and saving money by adopting green or environmentally friendly energy sources.
by
Greg Sushinsky
Greg Sushinsky is a passionate independent investor, who has done his own research, analysis and investing for 20 years. One of his earliest investing memories was when he first saved and bought U.S. Savings Bonds with his own money as a small child. From there, he studied investing on his own and made small stock purchases as he grew as an investor.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
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