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Is First Solar ($FSLR) a Good Stock to Buy on the Dip?


Is First Solar ($FSLR) a Good Stock to Buy on the Dip?

The recent election news has impacted the stock market in interesting ways, particularly in the energy sector. Following Trump’s election to the White House, oil-related companies saw an immediate rally, while green energy stocks like solar were heavily sold off. This could be due to expectations that Trump’s administration will prioritize oil drilling, boosting revenue projections for oil companies while sidelining green energy initiatives. But there’s an intriguing counterpoint worth considering: Elon Musk.

The Elon Musk Factor

Elon Musk, a prominent figure in renewable energy, played an influential role during Trump’s campaign. Given Musk’s relationship with the incoming administration, it’s reasonable to expect he’ll have some sway on green energy policies. Trump is known for his reciprocal style—rewarding loyalty and partnership. This dynamic could potentially benefit Tesla, SolarCity, and First Solar as a whole, turning what initially appears to be a headwind into a tailwind for solar stocks.

Strong Fundamentals Back First Solar’s Potential

From a fundamental perspective, First Solar has an attractive valuation. The stock’s P/E ratio is currently 16, with a forward P/E of 9, and its EPS is projected to grow by 56% next year and around 31% over the next five years. These metrics reflect a strong growth potential, supported by an operating margin of 36%, indicating efficiency in its operations. The stock’s price target sits at $282, with a current price around $194—suggesting significant upside. However, a downside for some investors is the lack of dividends. For those looking to hold and earn passive income while waiting for the stock to appreciate, this might be a limitation.

Technical Analysis: Signs of a Rebound?

On the technical side, First Solar is showing some positive indicators. The stock recently formed a “hammer” pattern on both weekly and daily charts, signaling a potential bottom. Additionally, it has hit a key support level, which could provide a strong foundation for a rebound. This pattern and support level make First Solar particularly attractive for buyers looking to enter or add to positions at a lower price.



Final Take: A Compelling Long-Term Opportunity

All signs point toward First Solar as a compelling buy at this level, especially for those with a long-term outlook. While this is not financial advice, and market conditions can always change, First Solar’s fundamentals, growth potential, and technical signals suggest it could offer significant value for investors. As always, make sure to do your own research and understand the risks before making any investment decisions.

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