An alternative-energy leader comes under pressure as government subsidies shrink.
By Kathy Kristof, Contributing Editor, Kiplinger's Personal Finance
t was once one of the brightest lights in alternative energy. But the future has dimmed for First Solar (symbol FSLR), the nation’s largest producer of photovoltaic equipment.
The once-hot stock, which traded for as much as $317 a share in May 2008, fetched just $35 on January 6. Its descent accelerated in 2011 after the Tempe, Ariz., company ousted its CEO and started cutting earnings forecasts late in the year. It now sees a profit of $3.75 to $4.25 per share this year—roughly half of what it was expected to have made in 2011. The stock (which we recommended in our June 2009 issue at $142) now trades at just 9 times the midpoint of the forecasted-earnings range.
Yet even at this seemingly bargain-basement price, few analysts are bullish. There are just too many uncertainties facing the industry and the company, says Citi Investment Research analyst Timothy Arcuri, who rates the stock a “hold.”
“Developing solar projects is very capital-intensive, and the payback is a little unclear,” he says..."
Read more: http://www.kiplinger.com/columns/picks/archive/first-solar-FSLR-stock-alternative-energy-photovoltaic-equipment.html#ixzz1mVByVK51
And, so , we face the end of government subsidies. Many would say that is a good thing, the industry should stand on its own. But, I'm not sure I agree. We know, long-term, renewable energy helps us in many ways, economic, bringing money back home from reduced imports, to cleaner air. Isn't that worth subsidizing?
Why should the oil companies and other traditional energy companies continue to get propped up the government with tax credits, grants for R & D, legal limits and protection? Should we stand by while they risk our environmental future by digging aggressively into sands and rock while clean energy companies fade away?
No, we should not. To do so is folly.
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