Utility-scale solar project builder First Solar (FSLR, Financial) has been pretty volatile in the recent months. The company’s terrible quarterly results have weighed down on the stock, however it is still up 16% YTD. In my opinion, investors should ignore the company’s short-term woes and focus on the company’s long-term prospects. Despite being up 16%, the stock still offers a lot of upside and is an ideal pick for long-term investors. Let’s take a look at the reasons why First Solar’s stock will continue rising in the future.
Increasing efficiency
First Solar’s modules have always had lower efficiency as compared to silicon modules. However, the company recently noted that it has developed a thin-film solar module that offers 18.6% aperture-area efficiency, and 18.2% full-area conversion efficiency. The company’s full-area efficiency figure tops the 17.7% record for rival multi-crystalline silicon (c-Si) modules; it's also well above the 17.0% efficiency reported by First Solar for a lab test module in March 2014.
Given that First Solar is working on one of its biggest weaknesses and has a potential solution, the stock is destined to move higher. Increasing efficiency will not only boost sales, but will also benefit First Solar’s customers.
Solar market is booming
The booming solar market is another impetus for First Solar’s long haul development. As per the most recent NPD Solarbuzz market report, the worldwide solar PV industry is developing at a rankling pace and is set out toward aggregate introduced limit of 500 gigawatts (GW) by 2018.
As a consequence of solid worldwide demand, First Solar sold out its whole manufacturing capacity for 2015 and the greater part of 2016. The organization has an assembling limit of 2.5 GW in 2015, up from 1.8 GW in 2014, and has a 3.9 GW undertaking accumulation. Moreover, the organization has 14.0 GW of tasks in its pipeline. Furthermore, the organization has a 1.7x book-to-charge ratio. As a rule a book-to-charge ratio more noteworthy than 1.0x speaks to solid interest. The book to charge ratio is the ratio of requests got to units delivered and charged consistently or quarter.
Growing in important markets
First Solar as of late settled its vicinity in Japan, the second biggest solar market. Japan is a substantial market with yearly PV establishments at 5.0 GW to 10.0 GW. On April 2015, First Solar booked its first arrangement in Japan. First Solar will begin construction at Japan in 3Q2015. Furthermore, First Solar keeps on experiencing solid request in Dubai. First Solar manufactured a 13MW sunlight based stop in Dubai. As per First Solar's earnings call, Dubai is fascinated with First Solar's low estimating and arrangements to assemble 1GW of sunlight based limit.
Conclusion
First Solar is working on increasing the efficiency of its modules and this is a big vote of confidence for investors. The company has historically struggled with low efficiency rate, however the company looks to have a solution to that problem now. Increased efficiency will undoubtedly boost sales and benefit the company going forward.
Moreover, the solar market is growing at a rapid pace and as a result, First Solar will witness great growth going forward. The company’s already sold out its manufacturing capacity for 2015 and is growing in important markets across the world. First Solar is a great buy at present levels.
