Why First Solar Popped
Jun 12th 2012 2:46PM
Updated Jun 12th 2012 2:48PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of First Solar (NAS: FSLR) jumped 21% today after the company said unexpected demand in Europe has caused the company to delay a plant closing.
So what: The plant in Frankfurt, Germany, was supposed to close in October but unexpectedly high demand for solar modules in Europe has compelled the company to delay the closing by about three months. The demand likely comes from delays in feed-in tariff rate cuts as well as a number of other suppliers filing for bankruptcy or insolvency over the past year.
Now what: This is something of a dead cat bounce because First Solar still expects to close the plant, and for demand to fall, but it is a short-term positive. I've said before that there is value in First Solar's shares, the market just doesn't appear to be pricing in any good news, or even the value of the underlying business. I'm not very hopeful the rally will last, but would look for other manufacturers to also see a bump in demand and benefit from the trends First Solar is seeing.
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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Motley Fool newsletter services have recommended buying shares of First Solar. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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