First Solar: When the Sun Will Rise for Solar Energy?

The solar energy boom was one of the unintended consequences of increasing government spending to promote manufacturing activity and to grow jobs. First Solar (FSLR) traded as high as $192 in 2009, as government tax credits promoted solar energy development. Though it was far from the $311 reached on May 12 2008, First Solar was one of many companies to more than double in share price.

First Solar Stock Performance:   

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Solar energy is viewed as value, only because the company value dropped so dramatically. First Solar shares bottomed at $11.43, but the sector is only in the early phase of recovering. Investors should look at the macroeconomic environment in this sector before investing in any of these companies. Prospects for solar energy companies will improve when these two excesses are addressed:

1)     Excess Supply

China is the biggest producer of solar panels. Bankruptcy and closures for companies producing excessive solar panels will help the industry. More closures are needed to reduce the excess supply. Companies in china are still losing up to $1 for every $3 of sales. Some of the companies facing losses from excessive supply include Suntech (STP) and Trina Solar (TSL).

Here is the company information for these companies:

Suntech Power Holdings Co. Ltd. (STP, Earnings, Analysts, Financials): Engages in the design, development, manufacture, and marketing of photovoltaic (PV) products. Market cap at $166.67M, most recent closing price at $0.92.

Trina Solar Limited (TSL, Earnings, Analysts, Financials): Designs, develops, manufactures, and sells photovoltaic (PV) modules worldwide. Market cap at $370.23M, most recent closing price at $4.55.

Solar panel makers must choose to operate at full capacity or not operate at all. This is due to the expensive cost of operating a solar panel factory. This means that panel makers not yet insolvent will continue to keep generating supply for the sector.

2)     Excess Competition…With Coal

Until the cost of electricity (expressed in cents per kilowatt-hour) can compete with coal, excess energy from these energy sectors will hurt the solar sector. Coal-fired power costs three-times less than that of solar power. Solar power average costs are still down from 2008, from $0.63 per kwh to $0.19 per kwh.

Business Section: Investing Ideas

Some of the companies to watch in the solar energy sector include:

First Solar, Inc. (FSLR, Earnings, Analysts, Financials): Manufactures and sells solar modules using a thin-film semiconductor technology. Market cap at $1.76B, most recent closing price at $20.26.

LDK Solar Co., Ltd. (LDK, Earnings, Analysts, Financials): Engages in the design, development, manufacture, and marketing of photovoltaic (PV) products; and development of power plant projects. Market cap at $140.2M, most recent closing price at $1.05.

Applied Materials Inc. (AMAT, Earnings, Analysts, Financials): Provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic (PV), and related industries worldwide. Market cap at $13.62B, most recent closing price at $11.01. This company pays a dividend (3.2% yield) and is a supplier for the photovoltaic (PV) industry.

Corning Inc. (GLW, Earnings, Analysts, Financials): Manufactures and processes specialty glass and ceramics products worldwide. Market cap at $19.79B, most recent closing price at $13.29. Global oversupply of poly, along with declining subsidies in Germany and Italy that began in early-2012 hurt Corning’s pricing.

Written by Chris Lau. To interact and discuss these picks with users, attach your watch list or portfolio to your friends on Kapitall. Message the author. He is ranked sixth (by points) on the all-time leaderboard. The leaderboard is located on your score icon -> Leaderboard.  Members on Kapitall earn free points, and even more points with every Kapitall Generation trade. These points may be redeemed for goods at the Kapitall store.

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Dig Deeper: Access Company Snapshots, Charts, Filings

• Suntech Power Holdings Co. Ltd. (STP, Chart, Download SEC Filings)
• Trina Solar Limited (TSL, Chart, Download SEC Filings)
• First Solar, Inc. (FSLR, Chart, Download SEC Filings)
• LDK Solar Co., Ltd. (LDK, Chart, Download SEC Filings)
• Applied Materials Inc. (AMAT, Chart, Download SEC Filings)
• Corning Inc. (GLW, Chart, Download SEC Filings)

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