Shares of solar panel manufacturer First Solar (NASDAQ: FSLR) have significantly underperformed those of its peers in the past five years. The stock rose only 15% in five years, compared to JinkoSolar‘s (NYSE: JKS) more than 100% rise and Canadian Solar‘s (NASDAQ: CSIQ) 146% rise during the same timeframe. Increased competition and substantial margin pressure have made investors concerned about the company’s growth potential.
It has also impacted First Solar’s top line. In five years, First Solar’s revenue fell by an average rate of around 5%. By comparison, JinkoSolar has been growing its revenue rapidly. Despite these concerns, First Solar stock is an attractive buy right now. Here are three great reasons why.
One of investors’ key concerns is the increasing margin pressure on panel manufacturers due to increased competition and commoditization of solar panels. It has resulted in lower gross margins for First Solar, and for two years they remained lower than those of its top competitor, Canadian Solar. This, however, changed last year. Meanwhile, JinkoSolar has targeted to increase its sales at much lower margins.