Chart of the Day – $FSLR at New Highs Ahead of Earnings

by Enis May 6, 2013 2:30 pm • Commentary

FSLR reports after the bell today.  The stock has been on a tear ever since it announced on April 9th much better than expected sales for 2013 and also raised sales guidance for 2014 and 2015.

The implied move for earnings is around 11% vs. the 4 quarter average move after earnings of around 12.5%.  The company’s strong future expectations have sent the stock to new 52 week highs.  It’s an interesting multiyear chart in FSLR:

3 year daily chart of FSLR, Courtesy of Bloomberg
3 year daily chart of FSLR, Courtesy of Bloomberg

After a relentless decline from around 175 in early 2011 all the way down to 11.50 in June 2012, FSLR finally found some buyers.  Volume picked up on the upside moves in the summer of 2012 (lower panel), and the 200 day moving average finally flattened out.  But the stock actually started 2013 on a weak note, before that kick-off move in early April on massive volume.  That was the largest single volume day in the stock’s history (circled in green), as a new batch of investors became interested in the stock.

With the stock now nearing $50, it is approaching its first significant resistance since the big move in the past month.  The red line in around $52 shows that sellers sold around that level in late 2011 and early 2012.  Going forward though, the $40 area will likely be strong support.

I currently have no position in FSLR.  I am bullish on the solar sector on a long-term basis, as I highlighted in my CotD post last week.  Putting aside the technicals, the fundamental valuations in the sector have become much more reasonable as well.  FSLR now trades for around 10x its 2015 projected earnings, and even only at 15x its 2014 projected number.  Clearly, many investors don’t trust those projections, but I believe the long-term trends are in the sector’s favor, particularly with costs much lower than they were 5 years ago.

But what about earnings today for FSLR?  Your guess is as good as mine.