In addition, in April 2012 the company said that it would restructure itself, and since then the company has reduced its workforce by 20% (1,400 employees). The subsequent consolidation of the company from which it has not yet emerged ultimately successful from one year later does not signify that it represents a buying opportunity at this time.
Another of First Solar’s primary competitors in clean energy is SunPower Corporation (NASDAQ:SPWR), a manufacturer of silicon-based solar panels, roof tiles, and crystalline silicon photovoltaic cells. The company, based in Silicon Valley, derives approximately 70% of its revenue from the Americas. Compared to the other two companies, SunPower’s growth is primarily driven by the performance in both the US and Latin America.
Unfortunately, given that the US government doesn’t offer direct subsidies for solar installations as does the E.U., it appears as if SunPower’s ability to drive significant revenue in the near term and long term is determined upon government support. For this reason and for the purposes of investing in clean energy for the high-growth potential in the future, SunPower should be avoided.
How the clean-energy trio stacks up
To begin with, all the companies are fairly attractively valued in the near-term. Over the longer term, however, it is harder to maintain visibility. This is due to the fact that emerging economies are a significant factor on the performance of the group. In terms of price performance, as of June 10, First Solar is trading at $56.40, Sunedison Inc (NYSE:SUNE) at $8.07, and SunPower at $21.44. These represent 105+%, 55%, and 70% respective price increases over the last three months.
First Solar’s estimated price-to-earnings ratio is approximately 12x, vs. 31x and 29x for Sunedison Inc (NYSE:SUNE) and SunPower, respectively, indicating that First Solar is still the most attractive.
Currently, the Street recommendations surrounding First Solar are also the most conservative/bearish, indicating that slight upside would present a large potential upward move in the stock. Overall, given the technologically innovative strides First Solar has made, it remains the most attractive way to invest in the clean energy space.
The article Clean Energy: To Play or Not to Play? originally appeared on Fool.com.
Colin Tweel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Colin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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