First Solar, Inc. (FSLR): Light Up Your Portfolio With These Solar Stocks

The SunPower X-Series product is considered the most efficient in the solar industry now, whereas solar panels of First Solar, Inc. (NASDAQ:FSLR) are around 12.9% efficient. Trina Solar Limited (ADR) (NYSE:TSL) also has efficient panels, which are 14.7% – 16.4% efficient, with a lower sale price per watt of $0.64. The panels of First Solar cost a bit higher at $0.68 per watt.

Chinese solar player Trina Solar generated most of its revenue, $622.9 million, or 48% of its total revenue, from Europe, while the U.S. ranked second with $331 million in revenue, accounting for 25.5% of total revenue. Trina Solar seems to have a concentrated customer base, with its top five customers representing around 25.1% of its total revenue in 2012. Its largest customer contributed around 9.1% to its total sales.

Valuation

Among the three, First Solar seems to be the most attractive. At $37 per share, First Solar is worth around $3.3 billion. The market values First Solar at only 4 times EV/EBITDA and 0.96 times sales. SunPower is trading at $10 per share, with a total market cap of $1.2 billion.

As SunPower generated only $38 million in EBITDA over the past twelve months, its EV/EBITDA is as high as 45. Its price/sales stays at 0.55. Trina Solar is the smallest company among the three, with around $310 million in total market cap. At $4 per share, the market values Trina Solar at 0.26 times sales. Its EV/EBITDA is not valid as the company had negative EBITDA.

My Foolish take

First Solar is a good and safe solar stock due to its strong balance sheet and low valuation. SunPower is more of an opportunistic stock with its new 21.5% efficient SunPower X-Series panels. The highest energy efficiency of SunPower’s new products could differentiate it from the other two competitors. However, I would rather wait for further improvement to initiate a long position in SunPower.

The article Light Up Your Portfolio With These Solar Stocks originally appeared on Fool.com and is written by Anh HOANG.

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