Top Picks 2019: First Solar Inc. (FSLR)

01/04/2019 5:00 am EST

Focus: ENERGY

David Coleman

Quantitative Portfolio Strategist, Argus Research

First Solar (FSLR) designs, manufactures and markets thin-film semiconductor photovoltaic (PV) cells and modules that convert sunlight into electricity, observes David Coleman, analyst and quantitative portfolio strategist with the leading independent research firm, Argus Research.

By using a very thin coating of semiconductor material over a glass sheet, the company is able to produce PV modules at a much lower cost than firms using traditional wafer technology. Fiscal 2017 revenue totaled $2.94 billion.

The current solar industry environment is attractive given declining manufacturing costs, the increased efficiency of PV cells, and the recent pullback in industry share prices.

Solar photovoltaic (PV), a solid-state technology, is emerging as the most viable of the alternative energy solutions, overcoming the limitations presented by mechanical-dependent alternatives such as wind power and solar.

As companies continue to invest in R&D and become more efficient, we think that solar will become more competitive with traditional power generation.

The company has an industry-leading financial profile with a solid balance sheet. We rate its financial strength as Medium.

The total debt/cap ratio of 2.6% is meaningfully below the peer average. The company had cash of $2.7 billion and available credit of $136.6 million at the end of the most recent quarter. Our 12-month target price is $60.

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