First Solar Will Make Me Rich

Well- the stock is making someonerich over the last year. Forget Google. The real action has been in solar power. First Solar (FSLR) to be exact. The stock is up from $23 to nearly $180 in after hours trading yesterday.

Earnings to come out on Wednesday but the stock has been soaring. It’s trading at the “sane” valuation of 170 times earnings (sarcasm alert, sarcasm alert). But hey- what’s not to like, right? Solar power is where it’s at.

The company just announced $1 billion worth of new contracts and there are skeptics, like rydercup11, on the Yahoo Message Boards about how much of a profit the company will really see from them:

Yeah… here we go again.

Thye announce $1B in contracts that occur over a 5 year period, or about $200M increase in annual revenues.

And, the market cap of the Co. goes up by $800M in the AH?

Even if this Co could generate a 20% net after tax profit margin on these sales, and that would be a phenominal after tax profit margin, that only equates to $40M per year in increased profits. And to assume a 20% net after tax profit margin is very very difficult to achieve, for a manufacturing entity.

The absurdity continues….

Be careful in companies that are trading up without any worries about company valuation. Apparently, some posters think Rydercup is being too logical:

Rydercup,

Obviously, you are not making any money, in this type of the market go with the flow and ask questions later, you are thinking it way too much…your loss.

Yes- Rydercup dares to question valuation. Will investors never learn? Watch out for a hard landing in First Solar. I don’t know when- but it will happen. Trust me.