Modine Manufacturing Co. (MOD), Barnes & Noble, Inc. (NBKS), First Solar, Inc. (FSLR): Is There Value in These Stocks?

Modine Manufacturing Co. (NYSE:MOD), Barnes & Noble, Inc. (NYSE:BKS), and First Solar, Inc.mo (NASDAQ:FSLR) are stocks with news which have recorded big price movements lately. However, it is seldom the case of ‘all news is good news’ for listed public companies. Here is a closer look at these big-moving stocks:

Benefiting from the automotive recovery

Modine Manufacturing Co. (NYSE:MOD) — a supplier of thermal management systems and components to automakers — has moved up in double digits over the last month. Modine Manufacturing Co. (NYSE:MOD)’s stock has been benefiting from a strong automotive recovery in the United States.

During the year ended March 31, 2013, North America accounted for nearly 40% of revenue while South America and Asia contributed another 15%. Automotive sales in these markets are better than other mature markets such as Europe. Bigger exposure to growth markets is expected to continue supporting its earnings but further gains in the stock price may be incremental at best.

Manufacturing stocks are not known for fancy valuations and the fact that Modine Manufacturing Co. (NYSE:MOD) trades at a reasonable forward price earnings ratio of 12.9 means it may be nearing its peak.

Barnes & Noble going down

Barnes & Noble, Inc. (NYSE:BKS) made a big breakout on the downside on Tuesday after missing earnings expectations for the fiscal fourth quarter ended April 27, 2013. The company reported a 7.4% drop in sales to $1.28 billion during the quarter, but a substantial increase in the cost of sales saw its losses widen to $118.6 million from $56.9 million in the same period last year.

This was not entirely unexpected as sales of its Nook tablet have been evidently low, dropping 34% during the quarter. Although the company has low debt equity ratio of just 0.17, it needs to be complemented with increasing sales to drive profits. However, the stock tanked after the company said it is considering exiting the tablet business and offered a conservative guidance for the current fiscal year.

Later, the company clarified it is looking to move away from the existing model of independently producing its own tablets, but the announcement did little to support shares which dropped as much as 18%.

Government’s sun shining on First Solar

First Solar, Inc.mo (NASDAQ:FSLR) is among the largest players in the solar module market and among a few profitable ones. It has reported profits in the last four quarters but it has a history of revisiting red ink. This is because its profitability is largely tied to government policies and incentives. Although there is little doubt governments world over will continue to support solar energy, small changes to financial incentives offered can make big changes to actual sales and implementation of solar products.

The stock has lost 20% over the last month, but still trades with 52-week gains of 176%, which essentially means there is more downside than upside from here. Analysts reckon this as First Solar, Inc.mo (NASDAQ:FSLR) has a forward price earnings ratio of 12.4, which is higher than the trailing 12 month’s 8.8.

Foolish bottom line

Among these three stocks, Barnes & Noble, Inc. (NYSE:BKS) and First Solar, Inc.mo (NASDAQ:FSLR) are clear no-goes for obvious reasons. If Barnes & Noble, Inc. (NYSE:BKS)has decided to exit the tablet business, there is little reason for the stock not to be valued as any other specialty retail stock. At 24.7%, its gross margins are among the lowest in the space.

Similarly, a lot depends on government policies to make First Solar, Inc.mo (NASDAQ:FSLR) a logical investment option. While the tide is in its favor as of now, it may change in the future if the government decides it has wagered enough money already. Modine Manufacturing Co. (NYSE:MOD) looks the best of the lot despite some inherent issues mentioned above.

The article Is There Value in These Stocks? originally appeared on Fool.com.

Jacob Wolinsky has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Jacob is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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