July 14, 2008 - First Solar, Inc. (FSLR) designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology. The company's solar modules employ a thin layer of cadmium telluride semiconductor material to convert sunlight into electricity.

Market cap on this stock is $23 billion. It had sales of $504 million last year. This year analysts think they will be $1 billion and next year, $1.3 billion. That's a growth company, at least in terms of revenues.

On the earnings side, there was a deficit of 14 cents a share in 2005. Things went positive to the tune of 7 cents in 2006. Last year, eps was $1.43. This year, analysts predict $2.55, next year, $3.50. That's a growth company in terms of earnings.

There's no question this company is doing a lot of things right. That's reflected in the enthusiasm investors have for the stock. But at what point does enthusiasm turn into hysteria? Maybe about now.

There's no question orders are pouring in. With a sales record enviable by any other firm, FSLR is delivering a product the world wants. And now. Revenues were up almost 300% in the first quarter. Earnings jumped from 7 cents last year to 57 cents for the quarter. Efficiencies as measured in cost per watt produced increased by 12%, falling to $1.14 while the price per watt sold went up 6% to $2.45.

Most of the sales have been international (99% in Europe for 2007), but the company is working on utilities in the U.S., particularly in the southwest where it's located. One customer it's wooing is Southern California Edison, supplier of power to one of the most densely populated regions. Furthermore, sales are done with long term contracts. This isn't a one time event, where there's an installation, and it's over.

More numbers: Return on Equity was 10.2% last year. Analysts expect 12% this year and 13% next year. Net profit margin was 22.2% last year, with expectations of 21.1% this year and 22.9% next year. The stock price was $143 at the beginning of this year, after peaking at $283 in 2007. Now it's back to $274. That's called volatility. The stock came public at $20 a share in late 2006. Can you say rocket? There's no dividend. Debt is only 6% of the balance sheet. There's $680 million in cash, and current assets are more than 3.5 times current liabilities.

FSLR is a great company. It's selling everything it can produce, building more plants, dropping great profits to the bottom line. It's everything an investor would want. Except for the price. If it could be 50% below this level 6 months ago, there's always the chance it could be there again or lower. This one is only for the brave, and only at prices lower than this. Proceed with caution.

- Company Web site: www.firstsolar.com

- Ted Allrich