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First Solar Stock Looks Strong Compared to Its Peers


Aug. 27 2019, Published 3:14 p.m. ET

First Solar (FSLR) stock declined more than 10% from its 52-week high early this month. Solar stocks have been shining brightly this year, and First Solar is no exception. FSLR stock has gained more than 45% so far this year.

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First Solar and SunPower: Technical indicators

First Solar stock is currently trading at $62.20, almost 3% below its 50-day simple moving average and 13% above its 200-day simple moving average. The stock has broken below its 50-day level, which could concern investors.

The level close to $55.30 could act as a support for the stock in the short to medium term. Its 14-day RSI (relative strength index) was close to 47, an indication that the stock is neither overbought nor oversold.

Among First Solar’s peers, SunPower (SPWR) stock is trading noticeably above both support levels, indicating strength. However, it has fallen more than 15% from its 52-week high this month. SunPower’s RSI was around 54 on August 26.

Short interest in First Solar stock decreased 5% on August 15. On July 31, there were 10.8 million shorted shares of First Solar, and its shorted shares decreased to 10.2 million on August 15.

Short interest measures investor anxiety. A decrease in a stock’s short interest could indicate that fewer investors expect the stock to fall from its current levels. In comparison, short interest in SunPower increased 8% on August 15.

First Solar stock exhibited implied volatility of 37% recently, close to its 15-day average. SunPower showed implied volatility of 61% while the broader market’s implied volatility was around 18%.

Attractive valuation

First Solar stock is currently trading 18x its forward earnings, which appears reasonable. Wall Street analysts expect more than 75% earnings growth from First Solar in 2019 and approximately 65% in 2020. So, the stock appears to be trading at an attractive valuation considering its robust expected growth for the next few years. During its Q2 earnings report on August 1, First Solar increased its earnings guidance for the rest of the year.

SunPower stock is trading at an inflated valuation. Its losses widened in early 2019. However, its stock is up more than 160% so far this year. First Solar and SunPower collectively comprise 14% of the Invesco Solar ETF (TAN).

Analysts’ views and price targets

Analysts gave First Solar (FSLR) stock a mean price target of $77.10, which suggests a potential upside of 24% for the next 12 months. FSLR closed at $62.20 on August 26. Of the 15 analysts covering FSLR stock, three analysts recommended a “strong buy,” seven recommended a “buy,” and five recommended a “hold.” There were no “sell” recommendations on August 26.

Wall Street analysts expect a downside of around 9% from SunPower (SPWR) stock. They gave SPWR a mean price target of $11.30 against its current market price of $13.15.

Please read Enphase Energy Stock Looks Strong, 600% 2019 Gain for more information on the solar industry.


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