By Peet Serfontein & Zimele Mbanjwa.
Our initial trade idea from mid-February 2024 encountered a stop-loss; however, after reviewing the technical indicators, we have chosen to re-enter the stock. Despite the setback, it continues to show promising opportunity.
First Solar is one of the largest renewable energy companies in the United States (US). It designs, manufactures, and sells photovoltaic (PV) solar modules for individual, commercial, and industrial customers. With its advanced thin-film semiconductor technology, the company can provide a high-performance, low-carbon alternative to traditional crystalline silicon solar modules.
Fundamental performance over the past five years has been quite volatile, but its long-term growth outlook is still sound. The industry is still relatively new and although we've seen a strong uptick in demand for alternative energy sources, there is still a bit of scepticism, particularly over how well the technology can scale and adapt to existing power infrastructure.
Technically, the stock is hovering around a price level one standard deviation below the mean of the linear regression channel (refer to the first chart), making for an attractive entry point. Because the channel is upward sloping, the overall price trend is regarded as bullish, and hence the expectation of a recovery in the stock.
The stock is trading below its 200-day simple moving average of ~$169.80, making this a contrarian trade.
Strengthening upside momentum, according to the MACD indicator as well as steep upwards movement of the on-balance volume indicator, supports a bullish stance.
Share Information
| Share Code | FSLR US |
|---|---|
| Industry | Renewable Energy Equipment |
| Market Capital (USD) | 17 billion |
| One Year Total Return | -25.08% |
| Return Year-to-Date | -7.67% |
| Current Price (USD) | 159.06 |
| 52 Week High (USD) | 232.00 |
| 52 Week Low (USD) | 129.22 |
| Financial Year End | December |
| The stock price has come under a bit of pressure recently, though various technical indicators suggest an imminent recovery. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 7.74 | 13.60 | 21.19 | 28.72 |
| Growth (%) | 75.71 | 55.77 | 35.58 | |
| Dividend Per Share (USD) | - | - | - | - |
| Growth (%) | - | - | - | |
| Forward PE (times) | 11.70 | 7.51 | 5.54 | |
| Forward Dividend Yield (%) | 0.00 | 0.00 | 0.00 | |
| The market is extremely positive on growth over the short - to medium-term. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | DAY - Stop loss (Close the position) |
HSY - Stop loss (Close the position) |
KMX - Take Profit (Close the position) |
|---|---|---|---|
| Entry | 69.45 | 191.47 | 73.30 |
| Current | 64.33 | 184.00 | 80.12 |
| Movement | -7.4% | -3.9% | 9.3% |
| The trade reached our stop loss level, and we closed the position. | The trade reached our stop loss level, and we closed the position. | We suggest taking an early profit in to reduce the overall portfolio exposure. |
| Share Name and position | CARZ - Buy (Continue to hold) |
CVX - Buy (Continue to hold) |
VWO - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 53.61 | 147.89 | 41.57 |
| Current | 57.45 | 149.59 | 41.12 |
| Movement | 7.2% | 1.1% | -1.1% |
|
An incomplete symmetrical triangle pattern remains of interest. The ETF remains above its 200-day moving average. Upside price momentum has halted, which is a concern.
Our profit target remains at $60, with a trailing stop-loss at $55.30. Exit the trade around 22 May 2024. |
The stock price is holding above key support, and this remains attractive. Fading upside price momentum is a concern.
Our profit target is $167, with a stop-loss of $143. Exit the position around 28 June 2024. |
The development of a symmetrical triangle pattern remains of interest. The ETF remains above its 200-day moving average. Upside price momentum has halted, which is a concern.
Our profit target is $48, with a trailing stop-loss of $45.50. Exit the position around 14 June 2024. |
