Why First Solar Popped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of First Solar (NAS: FSLR) jumped 21% today after the company said unexpected demand in Europe has caused the company to delay a plant closing.

So what: The plant in Frankfurt, Germany, was supposed to close in October but unexpectedly high demand for solar modules in Europe has compelled the company to delay the closing by about three months. The demand likely comes from delays in feed-in tariff rate cuts as well as a number of other suppliers filing for bankruptcy or insolvency over the past year.

Now what: This is something of a dead cat bounce because First Solar still expects to close the plant, and for demand to fall, but it is a short-term positive. I've said before that there is value in First Solar's shares, the market just doesn't appear to be pricing in any good news, or even the value of the underlying business. I'm not very hopeful the rally will last, but would look for other manufacturers to also see a bump in demand and benefit from the trends First Solar is seeing.

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At the time thisarticle was published Fool contributorTravis Hoiumdoes not have a position in any company mentioned. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw.Motley Fool newsletter serviceshave recommended buying shares of First Solar. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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