Long-Term Still Shines for First Solar

01/30/2015 7:00 am EST


Jim Powell

Principal Analyst, Global Changes & Opportunities

Alternative energy companies have been hit especially hard by plunging oil prices, observes Jim Powell, editor of Global Changes & Opportunities Report.

That's understandable because solar, wind, and geothermal power are only competitive with oil when its price is above $75 a barrel. At today's lower levels, the alternative energy business slows down.

However, when oil starts to recover, the lever that pushed alternative energy stocks into the basement will send them right back up, and then some.

In my opinion, First Solar (FSLR) is the best alternative energy stock to own. The company is a global leader in its field. It has low production costs, low prices, and many purchase programs that are popular with customers. Its solar cells also use thin film technology, the most advanced available.

Until recently, First Solar primarily sold large installations to utility companies in the sunbelt. It is now expanding into the fast-growing small business and residential markets.

To address these new markets, First Solar joined forces with Clean Energy Collective to develop community projects.

Unlike rooftop systems, that are not feasible for many buildings, community installations place solar panels in a central location to provide power to nearby customers. It's a great idea that's becoming popular.

One advantage offered by the small-scale market is its customers are not especially concerned with how the cost of solar power compares with the cost of conventional power.

Personal ecological values, the image that solar projects to friends, and customers, and other noneconomic factors are what often lead to sales.

This former high-flying stock now carries a low 16.9 P/E, a level not seen in years. I think First Solar will be volatile over the short-term, but it should be a long-term winner.

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