First Solar: Irrational Exuberance?

First Solar (FSLR), one of the solar power stocks, has had an incredible run over the last year. It is currently trading at a skyhigh P/E of 195 times earnings. In 2004 and 2005 the company traded with a negative ROE. In 2006, it was a paltry 0.9.

Can anyone say “gambling” when talking about this stock?

Some posters on the Yahoo Message Boards are beginning to liken the solar stocks to the dot-coms of the late 1990s:

Boy this message board sounds like an internet stock in 2000

How many solar companies are out there doubling? 40

First Solar competitor SolarFun Power Holdings (SOLF) is up another 6.50% after signing a $230 million contract with a Korean company to sell them wafers. It is trading with a P/E of 113.

There are hundreds of posts on the Yahoo Message Boards a day about these stocks.

Compare the solar stocks with a stock like Apache, one of the energy plays. Apache hit new all-time highs today and its shares were up 63% last year. It is still trading at 16 times earnings. They are an exploration company so their revenue will go up if crude prices stay high. The last post about Apache on the Yahoo Message Boards was December 30, 2007- or 4 days ago.

Irrational exuberance in the solar power stocks?

You be the judge.