We recently analyzed the best alternative energy stocks to buy and First Solar, Inc. (NASDAQ:FSLR) is one of them. Let’s discuss whether First Solar, Inc. (NASDAQ:FSLR) is one of the best alternative energy stocks. To view other stocks, check out our free report on the 7 Best Alternative Energy Stocks to Buy According to Analysts.
First Solar, Inc. (NASDAQ:FSLR) is engaged in the production and development of photovoltaic solar energy modules in the US, Asia, and Europe. It provides low-carbon alternatives by utilizing thin film semiconductor technology for its PV modules. The company serves developers and operators, commercial customers, industries, and independent power producers around the world. It has invested $2.8 billion in three factories in Ohio. First Solar, Inc. (NASDAQ:FSLR) will invest an additional $1.2 billion to expand its manufacturing capacity to 10 GW by 2025 in the United States. The company expects its manufacturing capacity to reach 20 gigawatts by 2025 globally. It is one of the biggest solar companies in the world and is expected to add $3.2 billion in value to the US economy.
Strong Backlog and Commitment to Innovation
Recently on May 1, First Solar, Inc. (NASDAQ:FSLR) released its earnings for the fiscal first quarter of 2024. The company posted earnings per share (EPS) of $2.20 and surpassed estimates by $0.18. Its revenue for the quarter reached $749.11 million, representing a year-over-year increase of 44.8%. The company raised its fiscal 2024 CapEx from $1.7-$1.9 billion to $1.8-$2 billion. The company boasts a strong backlog and a commitment to innovation. Over the past 9 weeks, it has booked 854 MW of solar panels at an average price of $0.301 per watt, bringing its year-to-date bookings to a staggering 2.7 gigawatts. The company’s backlog has reached 78.3 gigawatts of orders booked to 2030, with a record 3.6 GW production of modules in the first quarter of 2024. Moreover, the company has completed the certification of its new solar panel technology with a reduced module degradation rate, CuRe which is expected to be launched in the fourth quarter of 2024. Here are some of the comments from its Q1 2024 earnings call:
“We continue to anticipate launching CuRe at our lead line factory in Ohio in Q4 of this year. In parallel to preparing for launch, we continue to make progress on technical solutions that could enable accelerating CuRe’s replication across our factories at a lower CapEx than assumed at our recent Analyst Day.”
“The expansion of our Perrysburg, Ohio manufacturing footprint is expected to be completed, and commercial shipments are expected to begin before the end of the second quarter. Construction activity at our new facility in Alabama is complete, and the first tools are now being installed in preparation for the expected start of commercial shipments in the second half of this year.
Our new Louisiana facility is also on track with the start in commercial operations expected in late 2025. In Ashley, our India facility is continuing to ramp. And we’re proud that the first Indian-made Series 7 modules have been deployed in the field. We therefore expect to exit 2024 with over 21 gigawatts of global nameplate capacity and 2026 with over 25 gigawatts of nameplate capacity. All of this capacity is available to serve the U.S. market with over half of our capacity physically located in the U.S. Additionally, we are on track to commission the previously mentioned R&D projects in Ohio in the second half of this year, which will comprise a perovskite development line and a new R&D innovation center at our Perrysburg campus. The innovation center features a high-tech CadTel pilot line, which we expect will accelerate our development activities and bring capabilities for full-size prototyping of thin-film and tandem PV modules.”
The company’s net sales for the quarter were $400 million lower than the previous quarter, driven by the seasonal reduction in the volume of modules sold. The sales of the company and the solar sector can improve in the long term with the new tariffs announced by the Biden Administration against China. The tariffs have raised taxes to 50% on imported solar panels which can help the local solar manufacturers to benefit from the stable policies. Talking about the new tariffs, CEO of First Solar, Inc. (NASDAQ:FSLR), Mark Widmar said that a stable environment can lead to an increase in innovation and ensure a return on the invested capital. He said:
“The tariffs that were announced last week were just another step in trying to create a stable policy environment to ensure that there’s a level playing field here in the US to make meaningful investmentts”
He further added:
“I’m here today in our R&D facility. First of its kind, almost a $500 million investment that we’re making here in all not just for manufacturing, but for innovation and next generation technology. Those types of investments that you make that have to be enduring for multiple years need to have a backdrop of a stable policy environment. So, you can ensure you can get a return on invested capital. So, the type of policies and tariffs that were put in place announced last week plus some of the other changes made by the administration give companies like mine as well as others confidence to make these types of investments.”
A bird’s eye view of a sprawling solar facility in the Northeastern US, glimmering in the sun.
Is First Solar, Inc. (NASDAQ:FSLR) the Best Alternative Energy Stock to Buy Now?
As of May 23, First Solar, Inc. (NASDAQ:FSLR) is trading at a trailing twelve-month PE of nearly 25x, cheaper than the renewable energy services and equipment industry average of 45.33x, according to the data by CSI Market. Over the past six months, the stock has gained over 75%, as at the time of writing. The stock is also on the radars of analysts and hedge funds and has recently received multiple ratings and price target upgrades. On May 21, UBS analyst Jon Windham lifted his price target on First Solar, Inc.’s (NASDAQ:FSLR) to $270 from $252 and maintained a buy rating. The analyst believes First Solar, Inc. (NASDAQ:FSLR) stands to benefit from the electricity demand of big tech companies for their AI operations. Windham expects the company to grow its US market share and increase its earnings to reach $36.74 per share, up 370% from 2023 levels, fueled by AI-driven electricity demand.
Although First Solar, Inc. (NASDAQ:FSLR) is currently leading the solar stock rally and has remained a top pick of analysts since 2023 even when the solar stocks slumped, it is still ranked 6th among the best alternative energy stocks. To find out the top stocks leading the energy transition, head to the 7 Best Alternative Energy Stocks to Buy According to Analysts.
If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 10 Best Digital Payments Stocks To Buy Now and 10 Best Dividend Stocks of 2024.
Disclosure. None. This article is originally published on Insider Monkey.
Hedge Fund Resource Center