I mentioned I left 12% on the table by not pulling the trigger in the mid $140s since I was wary of the 100x FORWARD estimates. Well with the stock up 15% in after hours and approaching $200, I left more than 12% on the table (in 3 days).
This company is very hard to figure out a valuation on since its growing so fast and this profit came in way ahead of estimates. A slew of upgrades and higher estimates will be coming tomorrow. Analysts had pegged only $1.42 in estimates for 2008, but again this quarter alone they did nearly $0.50. So I am going to assume 2008 is going to look closer to $2.50? $3.00? (hard to tell).
Even at $3.00 2008 estimates which is double what analysts say, this stock is now priced in after hours at 65x forward estimates for 2008. Again, impossible to quantify where it belongs or what its earnings potential is next year. However, the ability to avoid the polysilicon shortage has proven to be a big advantage thus far in its public life. I will have to re-evaluate my position on First Solar (FSLR) after this type of result... I clearly missed the First Solar story.
I am a big solar bull (yes it's real, unlike ethanol), but do think the stocks (as a whole) have run ahead of themselves... this result will light a fire under the whole sector even though all the other companies are part of the polysilicon shortage chain and hence have real issues despite rapid revenue growth. First Solar has been immune to that; Sunpower (SPWR) showed the reality for the rest of the sector as its more comparable - great revenue growth, compressing margins and tougher to generate profits. That won't matter though with sentiment sure to roar off of FSLR's results.
No position
2 comments:
FSLR is far and away the best positioned solar company fundamentally, its unfortunate you missed on that one. But just so you know, JASO is considered to be the second best (a distant second). I never see you talk about that one...you should check that one out.
Yes it is unfortunate
I figured 2008 estimates were understated but not by this factor (FSLR)
JASO has surpassed anything I could imagine as well. IT placed a secondary and went UP. Talk about rare. I like the sector for the long run but its in mania mode right now so I have to protect profits (half the battle) People in solar feel unbeatable right now. Just like people felt in dry bulk shippers 2 weeks ago. Just like people felt in Chinese large cap 2 weeks ago. Just like people felt like in Chinese small cap 3-4 weeks ago. Nothing goes straight up, and when a lot of new to town bandwagon people start jumping on a sector I get nervous. They don't know much about the sector. So I will remain patient and find better opportunities down the road. I think the sector needs a correction - although FSLR is sort of stand alone at this point on its own. I am talking the polysilicon based companies.
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