First Solar (FSLR)

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First Solar (FSLR)

• CramersPosse
• Sam Young
• Mike Kaufman
• Andrew Ticzon
• Chris Botros

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Company Profile

• Solar Module Producer
• Founded in 1999
• Began commercial production in 2002
• IPO in 2006
• Largest market cap (16.13 B) of solar companies
• Offices in USA, Germany, and Malaysia
• Headquarters in Phoenix, AZ
• Lowest production costs among current thin film
  technology
• Long term contracts with major solar product
  developers through 2012
• 795.2 total return in stock price for 2007

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Product

• Specializes in producing solar panels to be sold
  to large scale solar power plants
• Each module 2x4 feet
• 70 watt average per module
• Photovoltaic (PV) Thin Film Technology
• Able to convert energy more efficiently than
  traditional direct bandwidth semiconductors
• 10.5 average module conversion efficiency
  (average around 15-16)
• Use cadium telluride as semiconductor material
• Polysilicion in short supply
• From by products of mining (zinc and copper)
• Abundance of cadium telluride allows FSLR to be
  able to meet production demand ? increase in
  sales
• Finished product in 2 hours

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Solar Industry

• Many solar companies, including FSLR, fall under
  the Semi-Conductor specialized industry
• Thin layer of semiconductor film
• Does not apply to all solar companies
• The industry is not too large total market cap
  of 71B.
• FSLR has been established for a long period of
  time and has been producing more efficient solar
  devices.

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Solar Industry Growth

• The Solar Industry has been outgrowing the rest
  of the market.
• In the last year alone the large cap solar
  companies have grown an average of 367, relative
  to the rest of the market which has dropped an
  average of about 3.

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Why Solar Industry Growth?

• Many industries are interested in solar energy
  and other forms of renewable energy because it
  can cut a large amount of overhead costs.
• For some companies, solar energy companies can be
  the key to a brighter future.
• For this reason even companies experiencing a
  loss desire to buy solar products.

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Solar Industry vs. NASDAQ
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Competition

• Competition mainly from semiconductor companies
  (i.e. Sunpower/Cypress) who do not specialize
  only in solar module production
• Solar cell production companies have drastically
  smaller market caps due to production/sales in
  specific regions
• Much more speculative, less stable
• Many smaller, private firms that either produce
  on a smaller scale or buy solar cells for power
  plants

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FSLR vs. JASO STP
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• Double Bottoms are a strong buy indicator
  signaling a bounce off resistance.
• Resistance in turquoise, support in pink
• MAs support and resistance
• Fibonacci trends
• Exhaustion gap
• Look at history
• Look at earnings calendar
• Other technical indicators (RSI and MACD)
• Liquid stock (volume)

Buy Signal
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• No areas of negativity because identifiable
  trends
• Areas of support/resistance
• Fibonacci trends relevant
• Technical indicators only important with short
  term range
• Historical patterns (industry information) are
  helpful in determining short term future price

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Strengths

• Experience
• Founder has been part of several business
  ventures since the 1940s
• Develop own production processesgt lowest
  production costs per watt in industry
• Competitive advantages kept in-house
• Early mover advantage?
• Elastic demand
• Economies of scale
• Learning by doing

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Weaknesses

• Solar power has its drawbacks
• Challenging to store
• Geography/climate factor
• Production process involves cadmium, which can be
  toxic
• Externalities?

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Opportunities

• People and firms always need energy
• Shift toward clean energy, as environmental
  concerns increase
• High growth potential if trend continues
• Energy from fossil fuels can become more
  expensive over time, since there is a limited
  supply of fossil fuelsgt alternative energy
  becomes more attractive

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Threats

• Competition from other alternative energy
  sources, and from nuclear power
• Could leave solar power in the dust
• Greenward shift may lose momentum

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Recommendation

• Recommendation Buy
• but be willing to hold for at least one year
• Rationale First Solar stands out in its industry
  because of its competitive advantages. Also, the
  solar industry is expected to continue growing
  strongly over the next few years. However, such
  growth prospects do not guarantee short-run stock
  appreciation.