First Solar Inc (NASDAQ:FSLR): A Strong Growth Stock Poised for a Technical Breakout

Investors aiming for substantial price gains frequently use a blended method, joining the future-oriented practice of fundamental study with the market-timing observations of technical study. One tactic that represents this combination is filtering for solid growth stocks that are also showing encouraging technical breakout formations. The reasoning is simple: find firms with sound and quickening business foundations, like earnings growth, profitability, and financial condition, and then seek a technical sign that the stock price is starting to show this strength by moving out of a period of sideways movement. This technique tries to match a company's internal growth path with a positive starting point in its price movement, possibly bettering the investment's risk and reward balance.

FIRST SOLAR INC (NASDAQ:FSLR) offers an interesting example for this tactic. As a top American maker of thin-film solar panels, the company works directly in the high-growth renewable energy field, a market with a very large possible customer base and strong long-term trends from worldwide carbon reduction actions.

Fundamental Strength: The Basis for Growth

The core idea of this tactic is to locate companies with solid and lasting growth. ChartMill's fundamental analysis report for FSLR gives the stock a good total score of 6 out of 10, but more critically, shows outstanding scores in important growth and value sections.

Growth Measures:

• Past Results: The company has shown very solid historical growth, with Earnings Per Share (EPS) increasing at a typical yearly pace of 52.90% over recent years. Sales also rose by 31.16% over the last year.
• Future Projection: Experts believe this pace will carry on, with estimated typical yearly EPS growth of 25.29% and sales growth of 13.24% in the next years. It is important that the sales growth rate is predicted to quicken compared to its past average.

Profitability and Value:

• High Margins: First Solar does very well in profitability, having an Operating Margin of 29.81% and a Return on Invested Capital (ROIC) of 11.26%, doing better than over 90% and 84% of its semiconductor equipment industry competitors, in order. This operational effectiveness is a key advantage.
• Good Value: Even with its growth picture, the stock seems fairly valued. With a Forward P/E ratio of 11.61, it is valued lower than 98% of its industry competitors and rests much under the S&P 500 average. This pairing of solid growth at a fair price is a sign of what growth investors look for.

Financial Condition Notes: The company's financial condition score is a medium 5/10. While it has a very low Debt/Equity ratio (0.06) and a solid Altman-Z score, showing low failure risk, its liquidity ratios (Current and Quick Ratio) are under industry averages. For a manufacturer needing much capital in a growth stage, this indicates a focus on using capital for growth instead of keeping a big cash reserve, a balance growth investors often allow.

Technical Picture: The Timing Indicator

A solid fundamental story is necessary, but the technical study gives the indicator for possible entry. ChartMill's technical analysis report for FSLR gives the stock a high score of 9/10, with a particular setup score of 8/10, showing a positive chart formation.

Trend and Results:

• The long-term trend is clearly positive, with the stock trading well over its main moving averages (50-day, 100-day, and 200-day).
• It has done much better than the wider market, beating 90% of all stocks over the past year and now trading close to its 52-week high.

Sideways Movement and Breakout Chance:

• Lately, the stock has started a time of lower price swings, moving sideways within a band between about $241 and $276. This sideways movement after a solid upward move can gather force for the next rise.
• The technical report notes a clear resistance area just over the present price, between $272.93 and $277.40. A clear move over this area could show the beginning of a new positive stage, giving a possible entry point for traders following the breakout tactic.
• Support levels are clearly marked under, around $257-$260, giving a sensible area for a stop-loss order to control risk.

This technical view fits well with the filtering tactic's aim: a fundamentally solid company showing a technical formation (sideways movement near highs) that often comes before a continued upward trend.

Conclusion

First Solar Inc fits the requirements of a "solid growth stock with a positive technical picture." Fundamentally, it works in a large growth market, shows very good profitability, and is forecast for continued solid earnings increase, all at a value that stays good compared to its competitors and growth speed. Technically, the stock is in a confirmed long-term upward trend and is now moving sideways near highs, preparing for a possible positive breakout.

This coming together of points makes FSLR a notable option for investors using a growth-with-momentum tactic. It shows how filtering for both measurable business strength and observable price movement can find chances that match a company's economic possibility with positive market timing.

Find More Possible Options The study of First Solar came from a particular filter for solid growth stocks with positive technical pictures. If this method fits your investment style, you can review an updated list of stocks fitting similar requirements by using the Strong Growth Stock Technical Setups Screen.

Disclaimer: This article is for information and learning only and is not a suggestion to buy, sell, or keep any security. The study is based on data and reports given by other parties. Investing in stocks includes risk, including the possible loss of the amount invested. You should do your own complete study and think about talking with a qualified financial advisor before making any investment choices.