With solar energy booming in the U.S. and Europe and First Solar (NASDAQ:FSLR) benefiting from tremendous U.S. subsidies, I believe that FSLR stock price will jump more than five times to $1,000 by 2030.
As I noted in a previous column, “America’s Energy Information Administration recently forecast that ‘54.5 GW of total capacity is expected to come online this year,’ up from just 10.3 gigawatts last year.”
And the EU’s solar activations are expected to climb to 50 gigawatts this year. That’s after its activations soared 47% last year.
Meanwhile, with much more electricity needed to support electric vehicles and most of the world souring on fossil fuels, the deployment of solar will, in all probability, keep booming over the next two years.
Here are the top four reasons why First Solar stock will reach $600 by March of 2025.
The Demand for Solar Energy Will Continue to Jump
Late last month, PJM, which operates an electricity grid that serves over 65 million Americans, warned that it would not have enough electricity capacity by 2030. With many fossil fuel plants retiring, the company warned that it expects an electricity deficit of 10 gigawatts in 2030.
With the EV revolution likely to accelerate across Europe and the U.S. in the coming years and fossil fuel plants being shut down, most grid operators in those jurisdictions are going to face similar problems.
Of course, increased purchases by electric utilities of solar energy, which has become quite cheap and enjoys the wide support of the public and regulators, is an obvious solution. Those booming purchases, in turn, will boost the top and bottom lines of First Solar and its peers.
Wall Street Is Seeing the Light When It Comes to Solar
One of the top investors on Wall Street last quarter purchased significant amounts of the stocks of two leading solar energy companies. As a result, the Street is finally ignoring the minor worries that have soured it on solar over the last few years and realizing that this sector is booming and well-positioned to continue to do so for the foreseeable future.
Specifically, billionaire investor Steve Cohen disclosed that he had bought nearly 872,000 shares of residential solar installer Sunrun (NASDAQ:RUN) last quarter, along with over 268,000 shares of SolarEdge (NASDAQ:SEDG), a solar inverter maker.
Since Cohen’s purchases were disclosed late last month, solar stocks have been on a tear, showing that the Street finally “gets” the sector’s great outlook.
First Solar Reported Great Fourth Quarter Results and Provided Superb Guidance
FSLR’s Q4 cash from operations came in at $795.2 million last quarter, up from $34.5 million during the same period a year earlier. The solar module maker’s top line climbed 10% year-over-year to $1 billion.
And on the critical guidance front, it predicts that its 2023 net income will come in at $7-$8, tremendously above analysts’ average estimate of $5.56.
Cumulatively, the results show that the company is benefiting tremendously and will benefit tremendously from the massive demand for its solar modules and from government subsidies.
FSLR Will Get a Big Lift From Government Subsidies
First Solar has two solar plants in Ohio and consequentially will receive extensive tax breaks passed by Congress last year for the production of solar products in America.
Meanwhile, thanks to other provisions passed by Congress, First Solar’s U.S. customers are eligible to deduct 30% of the funds they spend on solar projects from their tax bills through 2032.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.