Monday, May 9, 2011

First Solar, Inc. (NASDAQ: FSLR) Q3 2011 Price Target

Recent price: 129.96$
P/E Ratio: 18.54
3 Months Target Price: 163$

Company Description
According to Reuters, First Solar, Inc. is engaged in the manufacture and sale of solar modules with an advanced thin film semiconductor technology, and it designs, constructs and sells photovoltaic (PV) solar power systems. It operates the business in two segments: components segment and systems segment. Components segment designs, manufactures and sells solar modules to solar project developers and system integrators. Systems segment provides PV solar power system for commercial systems, which includes project development, engineering, procurement and construction (EPC), operating and maintenance (O&M) services and, when required, project finance.

Confidence Margins
Strong resistance $175.45 (+35%)
Light resistance $163.00 (+25%)
Light support $124.30 (-4%)
Strong support $100.19 (-23%)

Over the past two months, First Solar has been providing investors with disappointing sales figures. They seemed to be weakening because management kept coming on conference calls with revenue figures that were way lower than what analysts were expecting. This is a good entry point for the stock and it should yield great returns for the third quarter.

Entry strategy
For the cautious investor:
Buy the stock for 131$ or less.

For the risk-taking trader:
The September 2011 150$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 5.30$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 163$, or keep it until 175$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 163$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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