First Solar, Inc. (NASDAQ: FSLR) is the king of U.S. solar companies. Despite a monstrous rally in the stock market year-to-date, First Solar shares hit a new 52-week low today. In fact, if you look at the “max” timeline on the chart, First Solar looks like it is back to where it started from. No 2007 to 2008 energy boom to cheer, no nothing! With another round of solar bankruptcies in the news leaving the U.S. taxpayer on the hook, one has to wonder about what the stock market is telling investors about First Solar as an investment.
Things are so bad that even the Guggenheim Solar (NYSE: TAN) hit a new low today and the $23.99 is under the prior reverse split-adjusted 52-week range of $24.20 to $88.70 today. PowerShares WilderHill Clean Energy (NYSE: PBW) is at least diversified in alternative and clean energy, but it is still down 1% at $5.45. SunPower Corporation (NASDAQ: SPWR) is down 2.5% at $6.095 and MEMC Electronic Materials Inc. (NYSE: WFR) is down 3.3% at $3.475 on the day. MEMC is at a new year low as well, but SunPower still is 20% or more above its 52-week low.
It is not just investors who have to worry here about solar loans. The taxpayer is on the hook for a lot with First Solar vie DOE loans. It is interesting that Wall Street is calling for $4.01 EPS on near-30% sales growth to almost $3.6 billion for 2012 and $4.29 EPS on 12% sales growth to $4.02 billion in sales in 2012. Margins in the sector have been compressing to the point that we just do not even believe these earnings estimates. How could we believe the earnings estimates any longer?
We would note that it was in February when Axiom Capital’s Gordon Johnson called First Solar a “Sell” and he went on to call the stock possibly a total write-off as it will start to lose money next year. That is not a call that an implosion is imminent, but long-term could be very different. Jim Cramer on CNBC has also warned that he has the ultimate fears in First Solar.
It is hard to keep pounding on this sector leader, but the chart is telling you that things are not just bad at First Solar. They must be growing to dire circumstances. This stock keeps hitting lower and lower lows. Any rally seen in recent weeks has been promptly sold. The taxpayer is on the hook here along with investors.
European austerity measures are going to continue. The solar dumping charges with met with tariffs that were almost not worth mentioning. Chinese solar panel firms have subsidies that allow them to sell below local costs.
In all of the past articles we have never mentioned that First Solar was challenging the all-time lows, but that now appears to be the case. After looking back at a MarketWatch article, First Solar’s IPO priced at 20 million shares for $20 per share after having increased in size and increased in the price range. After the IPO, the stock opened up at $24.50 and closed at $24.27 back in November 2006.
We did not even bother mentioning the management vacuum that the company is in. Solyndra appears to just be the tip of the iceberg here. Look at the Yahoo! Finance chart below, if you dare.
JON C. OGG
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