The world's largest manufacturer of solar power plants,
First Solar Inc. 's ( FSLR ) shares surged
7.8% to $44.48 on Jun 25, 2013 buoyed by President Barack Obama's
proposal to reduce emissions from coal plants. The company's share
prices have oscillated between a 52-week high of $59.00 and a
52-week low of $13.81 and are now trading 222.1% above the low
price.DUKE ENERGY CP (DUK): Free Stock Analysis
ReportFIRST SOLAR INC (FSLR): Free Stock Analysis
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President Barack Obama unveiled a fresh climate change strategy
recently that will likely limit pollution from existing coal-fired
power plants. He issued directives asking environmental regulators
to set up carbon pollution standards for active plants. Coal
generates about 40% of U.S. electricity and coal plants are the
largest source of carbon emissions in the U.S.
Although this news came as a blow to coal-fired utility stocks,
some renewable energy stocks like First Solar witnessed noticeable
jumps. A major growth area in the renewable space is solar energy.
With the increasing need to develop renewable energy in response to
stringent environmental regulations, countries worldwide are
relying on solar energy for generating electricity.
First Solar swung to a profit in the first quarter 2013 after
incurring a loss in the year-ago period. The uptrend was driven by
higher sales of solar modules. The largest U.S. solar manufacturer
by shipments also registered an almost 52% upsurge in its top-line
on a year-over-year basis. The improvement was mainly attributed to
high third-party module sales volumes and an increase in revenues
from systems projects.
Again, First Solar has a strong balance sheet in the solar
industry with a debt-to-equity ratio of 13.3% (Zacks Industry
average: 44.3%) and cash and cash equivalents of $842.8 million in
the first quarter 2013. The strong liquidity position of the
company gives it a distinct advantage over its cash-strapped
First Solar is also seeking to expand internationally,
particularly in Japan. In Apr 2013 the company announced its
intention to acquire TetraSun from JX Nippon Oil & Energy
Corporation for an undisclosed amount. We note that JX Nippon is
the largest oil company in Japan. Post acquisition, both the
parties intend to produce and market TetraSun products in Japan.
The acquisition would be a strategic fit as Japan is expected to
become the second-largest market for solar products in 2013 after
China. The company is continuously receiving orders from domestic
as well as international clients for solar modules and other allied
services. In 2012, the company inked several deals with Chinese,
Indian and Indonesian organizations.
Alternative energy sources are gradually making inroads into the
global energy mix due to its clean burning nature and a growing
awareness among the masses regarding its benefits. Growing
population, economic growth, regulations as well as new
technologies are transforming the energy landscape. The solar
industry has been gradually recovering worldwide since 2011. This
is mainly backed by increasing panel prices, a boost in solar power
demand, accompanied with higher oil prices that is driving demand
Indeed, the recent proposal from President Obama may adversely
affect coal-dependent utilities like Southern Co.
( SO ), American
Electric Power Co. and Duke Energy Corp. ( DUK ). However, utility
providers like Sempra Energy ( SRE ) and Duke Energy
are increasingly adding alternative sources like solar, wind and
water for the generation of electricity.
First Solar presently retains a short-term Zacks Rank #3