Fwd: You Decide: Will the Sun Continue to Shine for First Solar?

---------- Forwarded message ----------
From: Wall Street Daily <wallstreetdaily@wallstreetdaily.com>
Date: Fri, Aug 10, 2012 at 6:25 PM
Subject: You Decide: Will the Sun Continue to Shine for First Solar?

Where in the World is Louis Basenese? I'm still out in the "field" testing a new discovery - one about to take the world by storm. Dare I say it's more revolutionary than the iPod? Yes, it's that big! In fact, it won't be long until this discovery finds its way into your home, car and smartphone, which explains why it will impact at least nine multi-billion-dollar markets. I'll report back shortly with my findings. (To learn an interesting way to get behind the discovery, click here.) In the interim, I've asked our energy expert, Jason Simpkins, to brief you on another hot investment topic, First Solar's stock. Enjoy! You Make the Call: Will the Sun Continue to Shine for First Solar? By Jason Simpkins, Contributing Editor First Solar (Nasdaq: FSLR) shocked the market when it reported an 81% increase in second-quarter profits last week. That could make it the only profitable solar company in the world, as analysts expect its competitors to announce losses this month. There's no question that First Solar's results were stellar. And the company has achieved as much (if not more) success as any business you can find in the solar industry. But many analysts remain skeptical - and rightly so. Despite billions of dollars in government subsidies, solar companies are notoriously unprofitable. So here's a breakdown of the arguments for and against investing in the company. At the end, we'll let the Wall Street Daily Nation (i.e. - you) make the final call... Sunnyside Up: First Solar's Luminous Second Quarter Here are the solid results that have everyone talking this week... First Solar reported $111 million in second-quarter profits - up from $61.1 million a year ago. The news vaulted the stock 26% higher in a single day. How did the company pull it off? What sets First Solar apart from the rest of the solar industry is that it's shifted its focus from consumer-oriented solar panels to industrial-grade solar power farms. You see, the price of solar panels has been on a sharp decline for years. In fact, the average market price for crystalline solar panels fell 20% in the second half of 2011 and 12% in the first half of 2012. And it's expected to fall another 11% in the second half of this year. Can This Investment Really Turn $50 into Windfall Profits? We've just uncovered a unique situation that could put a good chunk of cash in your pocket in 2012... Forbes says, "[This investment class] gets so little attention, that you still have the opportunity to find some hidden gems." Yet your broker is practically forbidden from recommending this investment to you. So what exactly is this investment? Why can't your broker promote it to you? And can it really be capable of turning $50 into windfall profits? Read this report for full details. As a result, prices for solar panels were just $0.76 per watt at the start of July, while First Solar's production cost averaged $0.69 per watt in the first quarter. That's a razor-thin profit margin. So instead of competing with a battery of Chinese manufacturers - which get generous subsidies from Beijing - for solar panel sales, First Solar has cut panel production and started selling solar farms. The company obtains all the necessary permits and financing for a project, arranges for a utility to buy the power it produces, and then sells it to an energy company. First Solar receives an upfront payment for the sale, as well as added revenue during construction to cover labor and the panels. Now more than half of First Solar's revenue comes from these solar projects, while its competitors get 90% of their revenue strictly from solar panel sales. The strategy helped boost second-quarter operating profit to $139.6 million from $64.5 million last year. Some of First Solar's most notable buyers include Exelon Corp. (NYSE: EXC), Enbridge (NYSE: ENB) and Berkshire Hathaway's (NYSE: BRK.A) MidAmerican Energy division. To top it off, with 2.7 gigawatts of solar projects under construction, First Solar has a fairly robust pipeline. The added business will only boost First Solar's profit more, while some of its over-leveraged peers continue to struggle in the face of low panel prices and a hyper-competitive industry. Still, the big question is whether or not this is the start of a sustainable trend - or just a short-lived anomaly... The Dark Side: Layoffs, Closings and Uncertainty First Solar faces two major challenges: Keeping its pipeline filled long term. Continuing to maneuver around the drop in solar panel prices. As it stands now, the company's project pipeline is strong. But it will have to be replenished. Since many of the government subsidies that made previous projects profitable have expired, that could be problematic. Meaning future projects will be more expensive and harder to sell. Plus, the decline in solar panel prices might not affect the company as much as its competitors. But it still poses a significant hurdle, which was seen during the first quarter when First Solar reported a loss of $449 million based on a 12% decline in sales. In light of those results, First Solar announced plans in April to cut 30% of its workforce, shutter two plants in Germany and put four production lines in Malaysia on idle. Rob Stone, an analyst at Cowen & Co., told Bloomberg that even if First Solar arranges as much as 600 megawatts of new contracts annually, its factory utilization will drop to about 70% by the end of 2014. That could incur more closures and additional charges. "How much longer can their profitability last?" he asked. Good question. And analysts are divided on the answer. Three firms - Robert W. Baird & Co., Cantor Fitzgerald and EVA Dimensions - upgraded the stock to a "Buy." And ThinkEquity advanced it from a "Sell" to a "Hold." Credit Suisse (NYSE: CS) has mixed feelings. It officially rates First Solar as "Neutral" with a price target of $20 (shares closed yesterday at $21.41). However, it also issued a "best case scenario" price target of $28 to $30. Four other analysts still rate First Solar as a "Sell." Now it's your turn to decide. Is First Solar worthy of investors' attention? Or is it simply destined for failure in an industry sustained by government handouts? Poll Question: Cheers, Jason Simpkins Tap into This $61 Billion Profit Stream Opportunity NOW! The U.S. government is preparing to launch a major offensive in cyberspace. A select group of practically unknown IT firms will be the key beneficiaries. To learn how you can game this situation for potentially explosive returns, click here now.

If you enjoy reading our no-nonsense, unbiased research at Wall Street Daily, feel free to share it with your family, friends and colleagues. Simply send them this link, so they can sign up for the TRUTH... for free, of course.

Republish Wall Street Daily on your Website or blog for free.
LEARN HOW

Have a question for our editorial team?
CONTACT US

Interested in our team exposing the truth on particular topic?
SEND US AN EMAIL

Twitter

Facebook

LinkedIn

RSS

You are receiving this email as a part of your free subscription to the Wall Street Daily e-letter. Manage your subscription. Or to cancel by mail or for any other subscription issues, write us at:

Wall Street Daily
Attn: Member Services
105 West Monument Street
Baltimore, MD 21201

© 2012 Wall Street Daily, LLC All Rights Reserved
Wall Street Daily, LLC. · 105 West Monument Street · Baltimore, MD 21201
North America: 1.855.405.3939; Fax: 1 410.223.2650
International: +1.410.226.2068; Fax: +1 410.223.2650
Website: WallStreetDaily.com Email: CustomerService@WallStreetDailyInfo.com

Nothing in this email should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice.

We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of: Wall Street Daily, LLC. 105 W. Monument Street, Baltimore MD 21201.

--
Jorge U. Saguinsin

www.cheapcures.blogspot.com

www.nuideashare.blogspot.com

www.twitter.com/nuideashare

www.twitter.com/cheapcures

www.facebook.com/Newideashare

www.facebook.com/cheapcures

"Be the best, do your best, expect the best"