Up A Mere 15% In 2023, Is First Solar Stock Poised To Do Better In 2024?

first sun FSLR 2023 is a relatively mixed year. While the stock is up about 15% for the year, it's underperforming the broader S&P 500 index, which is up 24% for the year. Renewable energy is generally affected by rising interest rates, making projects more expensive to finance and leading to reduced demand. In addition, Nextera Energy, one of the largest renewable power producers in the United States, has reduced the growth rate of its subsidiary, Nextera Energy. the birth partner NEP 12%-15% to 5%-8% in 2026 raises concern among investors in the renewable energy sector. First Solar also posted mixed results for the third quarter of 2023. While earnings missed estimates of $2.50 per share, revenue fell and rose nearly 27% to $801 million from a year earlier.

Over the long term, FSLR shares have delivered very strong returns, rising 70% from $100 in early January 2021 to around $170 now, compared to the S&P 500's nearly 25% gain over nearly 3 years over that period. However, the increase in FSLR shares is still far from significant. Stock return is -12% in 2021, 72% in 2022 and 15% in 2023. In comparison, the S&P 500 returned 27% in 2021, -19% in 2022 and 24% in 2023 . S&P in 2021 and 2023

It's true, individual stocks have struggled to consistently outperform the S&P 500 in recent years — in both good times and bad; IT heavyweights include AAPL, MSFT and NVDA, and even mega-cap stars GOOG, TSLA and AMZN. In contrast, the Trefis High Quality Portfolio of 30 stocks outperformed the S&P 500 every year over the same period . Why? As a group, portfolio HQ shares provide higher returns with lower risk than the benchmark index; It has not been a roller coaster ride as evidenced by the performance of the head office portfolio. Given the current uncertain macro environment with high oil prices and high interest rates, could FSLR face a similar scenario in 2021 and 2023 and underperform the S&P over the next 12 months - or will a strong rebound occur?

Overall, we believe there are many long-term positives for the solar industry in general and the first solar industry in particular. From a macroeconomic perspective, conditions are improving. Inflation fell sharply to 3.1% in November, with the Federal Reserve holding interest rates close to its 2% target. The Federal Reserve said at its most recent meeting that it is considering tripling interest rates by 2024. This should bode well for renewable energy. The sector is expected to benefit significantly from the Inflation Relief Act, which was signed into law in August 2022 and provides about $370 billion in subsidies and tax breaks for green energy investments. First solar, given the vertically integrated power generation in the United States, will be a major beneficiary of efforts to develop domestic renewable energy generation. The company said last week it plans to sell $700 million in tax credit payments generated from solar module sales this year to the company Fischer. FISV .

Additionally, supply chain bottlenecks affecting most industries have been reduced, which could ultimately help solar power producers increase supply and profitability. First Solar estimates that its gross margin will increase by about 20% to 30% from current levels over the next three years, excluding the benefits of the inflation reduction act driven by the lower cost per watt of its panels and higher average selling price. Operating margins will increase from 10% to 24% over the next three years, largely due to a stable operating cost structure. The company has significant revenue visibility with an order backlog of 81.8 GW through 2030. Moreover, there is still a long way to go before solar energy is accepted as an energy source. A 2021 US Department of Energy study found that solar power could produce 40% of US electricity by 2035, down from less than 5% in 2022. This can drive long-term growth We remain positive on First Sun stock, valued at $211, which is about 50% above market value. First see our analysis on Solar Power Ratings : Expensive or Cheap for more information.

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