First Solar Gains 56% in a Month: How Should You Play the Stock?

Core Viewpoint - First Solar Inc. (FSLR) has experienced a significant stock surge of 55.9% over the past month, outperforming both the solar industry and broader energy sectors [1][2]. Group 1: Stock Performance - FSLR's stock performance has outpaced the Zacks solar industry's gain of 37.3% and the Zacks Oil-Energy sector's growth of 8.8% during the same period [1]. - Other solar stocks, such as Canadian Solar (CSIQ) and Emeren (SOL), also showed strong performance with gains of 40.8% and 33.9%, respectively [2]. Group 2: Factors Driving Stock Surge - The recent surge in FSLR's stock was influenced by a tax and spending proposal introduced by the U.S. House of Representatives, which was less aggressive than expected regarding tax incentives for low-carbon industries [4]. - Wolfe Research upgraded FSLR's stock rating to "Outperform," citing the company's strong domestic market position, which likely contributed to the stock's performance [5]. Group 3: Manufacturing Capacity and Revenue Projections - First Solar is expanding its manufacturing capacity by approximately 4 gigawatts (GW), aiming for an annual capacity of over 25 GW by the end of 2026 [6]. - The company has contracts for the future sale of 66.1 GW of solar modules, valued at $19.8 billion, expected to be recognized as revenue through 2030 [7]. - The Zacks Consensus Estimate for FSLR's long-term earnings growth rate is 34.5$1.01 billion, with a year-over-year growth estimate of 0.17% [12]. Group 5: Valuation Metrics - FSLR's forward 12-month price-to-sales (P/S) ratio is 4.06X, significantly higher than the industry's average of 1.34X, indicating a premium valuation [15]. - In contrast, competitors like Canadian Solar and Emeren are trading at discounts to the industry, with P/S ratios of 0.09X and 0.83X, respectively [16].