Solar panel maker First Solarís Google-like stock price ó shares
soared 34 percent today to close at $224.43 ó is either a sign that
green tech is getting bubbly or that investors genuinely see a huge
potential market in renewable energy.
Probably a bit of both. The Phoenix-based company makes thin-film
solar modules for use in solar power plants or in rooftop arrays for
commercial buildings. While thin-film offers lower efficiency than
traditional silicon-based solar modules, it can be produced cheaper,
and First Solar (FSLR) has been rapidly ramping up production. The
trigger for todayís investor love was First Solarís third-quarter
earnings report on Wednesday that showed revenue spiked 106 percent to
$159 million from the previous quarter and up a whopping 290 percent
from a year ago. First Solar ó fun fact: itís biggest shareholder is
the estate of Wal-Mart (WMT) heir John T. Walton ó also upped its 2007
revenue forecast to $480 million to $485 million from an earlier
estimate of $400 million to $415 million. The stock fell back to $206.85 at the close of trading Friday.
Investors were prepped for by recent announcements from First Solar
that the company would double its manufacturing capacity by the end of
2009 and that it had signed new deals with customer. Much of First
Solarís production goes to solar companies in Germany, where generous
government subsidies have made the a country solar hotbed. First Solar
also is benefiting from being one of the first new-generation thin-film
solar companies to market. A host of thin-film startups like Nanosolar
and HelioVolt ó they also minimize the use of expensive silicon but use
a different technology ó have scored hundreds of millions of dollars in
funding from venture capitalists but have yet to produce products.
Savvy investors also know that the U.S. market is poised to take
off, particularly for utility-scale solar projects. Half the states
now have imposed so-called renewable portfolio standards that require
varying percentages of utilitiesí electricity be obtained from
greenhouse-gas free sources. In California, for instance, in addition
to the stateís global warming law that will cap greenhouse gas
emissions, portfolio standards oblige utilities like PG&E (PCG),
Southern California Edision (EIX) and San Diego Gas & Electric
(SRE) get 20 percent of their power from renewable sources by 2010 and
a third by 2020. Theyíre going to need a lot of solar power plants to
meet that mandate.
That explains why other solar module makers have experienced a similar run-up in their stock. For instance, SunPower (SPWR), which makes solar panels used in residential and commercial arrays as well as in photovoltaic power plants, has seen its shares spike 81 percent over the past three months to close at $141.93 on Thursday. Thatís a 322 percent premium over what the stock was trading a year ago.