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  Thursday, 04/03/08
 Posted 04/03/08,  11:52 pm ET

(Scroll down to see Jim's comments below)
 
 
Today's date:  Thursday, 04/03/08
  Dow Jones: 12,626    + 20
  NASDAQ:   2,363    + 1
  S&P 500:   1,369    + 1
 
 
 
 
 
First Segment
 
 
Opening Segment 1 Title: 'Bright Idea'

.  .  .  .  .
Featured Stock(s): First Solar, Inc. (FSLR)

See FSLR's official website here.

See the Yahoo! Finance profile for FSLR here.


 See Opening Segment 2, below...
 
After this segment, you can see Jim's Lightning Round picks here...



JJC:    Of all the stocks I have championed on this show... of all the recommendations I have stuck with...  through thick and thin... none has been as controversial as First Solar (FSLR)!

Night after night, I get asked about all sorts of solar companies in the Lightning Round...  SunPower (SPWR)...  LDK Solar Co.Ltd. (LDK)...  Evergreen Solar Inc. (ESLR)... JA Solar (JASO)...  and so many other Chinese solars... Canadian solars...  and I say, forget it Jake... It's FSLR.

And, while I endorsed Applied Materials (AMAT) as a hybrid play on solar, to meet popular demand, I still do not like it nearly as much as FSLR.

.  .  .  .  .

In light of the decline today in MEMC Electronic Materials (WFR), which I gave you a heads-up on last week... a company that makes silicon wafers for solar... a decline that initially sent down anything solar... this is the time... right now... to explain why I like FSLR, and why I think you should buy it... and buy it aggressively on any weakness.

.  .  .  .  .

First, unlike any of the other solar companies, FSLR apparently does not need government subsidies to make money... It's profitable...

That's because the rest of the (solar) companies use a silicon-based material, that is far more expensive and complicated to produce, than FSLR's cadmium telluride film technology.

The cost of silicon is enormous, and it's not getting cheaper, while FSLR continues to make its own technology less expensive, bringing down the cost...

And, even though solar panels are - on the surface - more efficient at producing electricity by area, FSLR's technology seems to be catching up.  Very close in efficiency ratios...

They basically have the same amount of power right now, but FSLR's is coming down (a good thing)... coming down in cost...  Some day, FSLR's technology could become as efficient as silicon, by area...   It doesn't matter though...  What matters is that it's cost is already tremendously more efficient. 

You need to understand this.  It means that silicon will never be as cheap as thin film.  So the world is going to go to thin film.

.  .  .  .  .

Second...

FSLR can mass-produce its panels at a very low cost... and the company is driving down the cost of a unit of energy, known as a "cost per watt", to a price that, over time, could be as low as oil, or even coal.

Why does that matter?

Because that means their panels are for industrial use... not meant for the consumer.

.  .  .  .  .

We heard Cypress Semiconductor (CY) CEO, T.J. Rodgers, who helped start SunPower (SPWR) - which is owned by CY - talk about how the consumer has pulled back from the discretionary spending that was driving solar sales.  They're not putting those ugly things on roofs anymore.  They can't afford it...  It's like home theater... it's something else you don't have to do...

FSLR's customers are utilities... Those giant ones you trade... the utes... which use their panels to help produce energy at a time called "peak demand"...

Now we're hearing that FSLR is having discussions with the big boys in the electricity production game...

Just today, FSLR's CEO, Michael Ahearn, told us, "we are having multiple discussions.  And what we are trying to get to this year are some initial relationships, and some pilot projects."

That's huge for FSLR!  Right now, it doesn't have any business in the United States...

I don't expect FSLR to replace coal or oil or natural gas right now, for what is known as baseline use... everyday use.   It is already cheap enough to serve utilities around the globe without subsidies.  You don't need a strong economy to propel (FSLR's) sales.  

.  .  .  .  .

FSLR has the proprietary technology that no one else has... one that it can mass produce...  FSLR can put up plants rapidly to mass produce its panels in a quantity that can meet world demand.  You can't duplicate thin film technology, just like you couldn't duplicate Intel (INTC)'s thin film technology... 

.  .  .  .  .

Now, what does it mean?

I believe this company, FSLR, is in the early stages of being the next Intel...   When I was at my hedge fund, I made Intel a core position in 1989, telling people that it could supplant not only all semiconductor companies, but also big iron companies... IBM, Unisys, Data General, Digital Equipment... by making PCs smarter than the large machines.

I think FSLR will do the same... It's going to do the same to all other companies in the solar industry, including the ones all you skee-daddies keep calling me about in the Lightning Round...   I think it could be like Intel, which doubled and doubled and doubled again... as it came to dominance.

Ride it... ride it... ride it.

.  .  .  .  .

Fourth...

FSLR, unlike all other means of energy, doesn't leave any footprint.  It's panels last 25 years, and then they're recyclable.  It doesn't need vast fields - think wind... or refineries, or stinky power plants... to work...

Utilities fix their panels on the roofs of commercial properties...  They contract with utilities.  They're under intense pressure worldwide to cut their carbon use.

Just last week, Southern California Edison (owned by Edison International (EIX)) announced their new solar initiative to install $875 million worth of rooftop solar panels.  I think only FSLR can meet the specifications of that SoCal Ed project...  and they're the largest utility in the most important and progressive state, when it comes to solar.

.  .  .  .  .

Finally...

Every candidate - McCain, Obama, Clinton... they've all endorsed solar as the best way to go for the future.   That means years and years of FSLR orders.  And, right now, it doesn't even sell into the U.S. yet...

.  .  .  .  .

[See Jim's previous extensive comments and argument to buy FSLR here.]

.  .  .  .  .

The Bottom Line!:      I'm not going to go into talking about estimates or valuation... I am just going to say that First Solar, Inc. (FSLR) is the long-term winner.  I think everyone else is the loser, and I will be embracing FSLR all year, as the single-best way to play green energy... something that's imperative, in an era, where the world is trying to reduce carbon emissions, and oil trades at $100 a barrel.


[See Jim's 2nd Opening Segment stock picks below... ]

 

 

 

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■

Stock Snapshots - Includes all stocks mentioned above

 ■
 

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)

FSLR

251.60

256.00

First Solar, Inc. (FSLR)

 

        

 

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Second Segment
 
 
Opening Segment 2 Title: 'The Sell Block'

.  .  .  .  .
Featured Stock(s): Anheuser-Busch Companies Inc. (BUD)
Molson Coors Brewing Company (TAP)
 
After this segment, you can see Jim's Lightning Round picks here...

 

JJC:    For tonight's Sell Block, I'm giving you another pairs trade...  like we did last week with Urban Outfitters (URBN) and Liz Claiborne Inc. (LIZ)...  This is how the pros do it...   As a matter of fact, too many hedge funds do it this way, which is why there's so much volatility.

You take a sector, and you buy the best stock... while selling or shorting the worst one.

.  .  .  .  .

Today, I've got the ultimate beer pairs trade...

First of all, we heard from Constellation Brands Inc. (STZ) that just reported and said the beer business is getting better...  Hmm... so that's a light bulb that goes off in my head...

But we want to do a sophisticated beer trade, where we buy the best beer stock, and sell one we think is going lower...

That's why I believe it's time to sell the King, Anheuser-Busch (BUD)... and buy the new king, Molson Coors (TAP)! 

.  .  .  .  .

The #1 reason is that TAP has now teamed with SAB Miller to form a joint venture that could take down even the mighty BUD.

The two companies are going to combine their U.S. subsidiaries into a joint venture called Miller Coors, that will make TAP much more competitive than BUD...

.  .  .  .  .

The combined Coors and Miller will have about 29% market share.  Okay, okay... I know... still way below BUD's 48% share... but now at least you'll have a shot, right?  Coors alone was only 11%.  This is a huge deal...

In terms of cost savings, I'm looking at $500 million shaved by 2011.  That's about 42% that should get realized by TAP.

I call this the ultimate tag team and, for this reason alone, I would be buying TAP...

.  .  .  .  .

Together, these companies have what I would call "heft"...  They finally will have enough money to advertise much more aggressively, and then take share from the king...

I believe this should happen soon, and you need to be in ahead of when it starts happening.

But there's more going on here...

.  .  .  .  .

First valuation...

Both TAP and BUD trade at 15x expected 2009 earnings, but TAP has a much higher long-term growth rate... 12.3% compared to BUD's pathetic 8.2%.  That makes TAP the cheaper stock by far...

Then there's the rest-of-world (i.e., ROW) exposure.  TAP is a real ROW-er... 55% of its revenues come from outside the U.S.   BUD only gets 7% from ROW.

Again, this fact alone justifies buying TAP over BUD.

.  .  .  .  .

But why sell BUD?...

The TAP/SAB Miller tag team... is one reason.  I think BUD also has some internal woes.  It's not a bad company, but it's facing problems with its biggest investment, in Grupo Modello.  BUD owns nearly 50% of this company, Mexico's #1 brewer.  You probably know it as Corona...

It's getting hit by lower U.S. sales, as people pare back on more expensive imports and buy the cheap stuff.  A slowing economy...

The other thing is... I don't really care that much for BUD... it can't much bigger.  The King already dominates the U.S. market.  It just doesn't have enough growth to get the same multiple as TAP.