New Trade for November 5th, 2020

Futures indicate a higher open this morning and a continuation of yesterday’s rally.  Stocks are on track for their best election week in decades as Wall St. continues to welcome voting results that favor a Biden win and republican senate. 

Renewable energy stocks had a strong run up ahead of the election and sharply reversed as results began to roll in.  What’s causing the reversal is that it doesn’t seem that Dems will take the Senate.  Despite the fact that Congress could block policies like Green New Deal legislation, that doesn’t fundamentally undermine the industry.  The president controls tariffs and policies related to how renewable energy will compete against fossil fuels, and those changes may be more important than subsidies from Congress.  



The reality is that the performance of renewable energy companies and renewable energy stocks was improving even before the election.  These broad trends aren’t going to change no matter who is president or who controls Congress.  As we’ve seen in the past four years, even a hostile administration hasn’t been able to stop the industry from growing.  Furthermore, companies such as Microsoft are setting their own sustainability objectives.  The demand for renewable energy is going to continue to grow from these types of initiatives, with or without government mandates. 

 This dip may be an opportunity to snatch up some shares of this solid company at a more attractive price.    

First Solar (FSLR) is a global supplier of solar systems from modules to utility-scale projects.  The company says it expects shipments at a midpoint estimate of 5.6 gigawatts for 2020 and has 6.7 GW of production planned for 2021 delivery.  Demand will continue to grow and the pace may accelerate after the election. 

First Solar is enhancing its growth strategy.  The company was recently awarded a power purchase agreement (PPA) for a 180 megawatt solar project that will provide the clean energy needs of three General Motors facilities in 2023.  

First Solar recently released strong third-quarter results.  The company reported sales of $928 million, that’s a 70% jump in sales versus the same quarter last year.  Sales were 44% above second quarter revenue of $642 million.  Though FSLR shares trade for a premium, third-quarter earnings show that the business continues to live up to its valuation.  Which is why some investors consider this dip an opportunity worth seizing.   



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