There are two reasons why First Solar (FSLR) will ride Europe’s solar boom to big profits:

Europeans are offering huge incentives to achieve their ambitious goal of generating 20% of their electricity via solar power by 2020, and they’re also allowing consumers to sell their excess electricity
back to power companies at double what they pay for it.

Yes, you read that right. You grab a hefty tax credit for going solar, and then you get to sell your electricity back into the grid at twice what you pay for it and bank the difference.

So it’s no wonder the solar industry in Europe is booming and why this top solar stock is making money hand over fist.

Why You Could Retire On This Top Solar Stock

First Solar is a relatively unknown $20 billion solar producer that not only is growing its quarterly revenue year over year, but also derives 98% net sales from European Union countries.

It’s one of the world’s leaders in the manufacture and sales of commercial and residential solar panels, whose new 2007 German plant reached full capacity in six months.

First and foremost, the company has proven its ability not only to drive the cost of solar down and maintain generous profit margins in this highly competitive market but also to reward investors along the way.

In fact, experts estimate that its new solar plant in Malaysia will not only cut its costs by 20% but give it an ever greater edge in the world marketplace. Add to that the fact that they’re expected to open three more plants in the next year and a half.

Here’s another reason: The company’s solar panels are the most cost-efficient in the world, delivering a cost-per-watt generated that’s an astonishing 50% less than that of its competitors.

Here’s how: Unlike most solar makers that use silicon in their solar cells, First Solar uses cadmium telluride. As a result, the company hasn’t been affected by the exploding price in polysilicon.

First Solar benefits from the one-two punch of lower manufacturing costs and lower materials costs.

The result for investors?

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The beginning of a profit run I see headed First Solar’s way.

Three Reasons Why First Solar is Poised to Profit

1. Over the past five years, the solar power industry has grown at nearly light speed — 40% annually.
2. Expect this pace to increase, as rising energy costs and $4-a-gallon gas continue to push the demand for alternative fuel sources not only in Europe but in the U.S. as well.
3. President Obama has called for more economic incentives to reduce the cost of solar panels here in the U.S. Obama said that his goal is to double renewable energy production in America. It’s about time we took alternative energy seriously as investors, too.

   In my opinion, the best stock to profit from this policy is First Solar. The company makes solar-power modules with a thin-film semiconductor technology that doesn’t use silicon. Unlike most stocks in this sector that are simply trying to stay afloat, First Solar is already turning a profit.

Earnings Support FSLR’s Top Stock Status

First Solar recently reported quarterly results that were nothing short of spectacular.

Since the start of this recession, every major solar company in the world has seen business affected by falling sales and demand — that is, except for First Solar.

The company prices its solar panels below the production costs of many of its competitors, which has put it in a position to buck the downward profitability trend that has weighed on the entire industry. What’s more, First Solar has managed to increase its operating margins to 40%, which indicates that the company is growing at a healthy clip.

Over the past four quarters, FSLR has posted an average 30.5% earnings surprise. The current quarter ends in June, and First Solar is expected to experience 91%+ growth.

I rate FSLR a B or Buy.

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