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Opening Segment 1
Title: |
'Five Year Plan'...
'Here Comes The Sun' |
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Featured Stock(s): |
First Solar, Inc. (FSLR)
See Opening Segment 2,
below...
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Tonight's show is about a
concept that doesn't get
enough play, even though
it's critical to
investing, particularly in
an era where nothing seems
to last more than a week
or two... SAT word...
ephemeral... and we get
horrible markets, without
really any news, other
than a continuation today
of stagflation fears...
And what is it?... I'm
talking about
visibility... the ability
of a company, itself, to
see what it's earnings
will look like in the
future... next year... the
year after... the year
after that...
A company with great
visibility can give you a
great picture right now of
what it's going to earn in
2012... Tell me we
don't need that in a
period where the stock
market can go down a
couple of hundred like
that... tell me we don't
need that to backstop our
thinking.
One great side effect of
this kind of visibility is
that you don't lose
analyst support.
We've been getting
downgrade after downgrade
after downgrade of key
stocks, and it's very
painful. See,
nothing really intimidates
analysts more into keeping
their buys, and be
unwilling to downgrade,
than visibility... Nothing
can defend a stock like
visibility, because then
the analysts... they have
very few worries about
number cuts, because they
know what the company's
going to earn...
We need that in this time
period, believe me,
because that's driving a
lot of stocks down...
analysts who are
panicking...
This is protection against
that.
I don't know if visibility
has ever been more
important than it is right
now...
When the market is flooded
with uncertainty, as it is
now... the stocks with the
best visibility are likely
to recover first...
meaning that you can buy
them on the way down... ('mon-back
sound of truck backing
up)...
. . . .
.
That's why - in honor of
the incredibly horrible
market we had today - I'm
going to highlight three
stocks tonight that I
think have five years
worth of visibility, which
is incredible and very
rare...
You want to invest in
stocks that you have
conviction in... and
knowing what the future
looks like is a great way
to have conviction, even
in this most horrible,
ugly, miserable tape.
We're looking for
companies that can get
with the plan... a
Stalinist five-year
plan... and tell us how
much money they're going
to make, far into the
future...
Very few businesses can
accurately forecast that
far out, but the three
stocks I have five year
plans that would even make
Mao's mouth water and turn
Trotsky into a Stalinist
true believer, to use
every single communist
metaphor out there...
. . . .
.
My first champion of
visibility is...
First Solar, Inc. (FSLR)...
A delightful day for those
who came in with FSLR,
wasn't it?... This
is a solar stock that has
already made our viewers a
fortune...
This one's up 387%, since
we first recommended it,
on March 7th...
Up 271%, since I made it
one of my green day stocks
on April 20th...
Up 271%, since I
recommended it again
on July 27th...
You get the point.
Well, here's an even more
pointed thing...
FSLR declined $20 today...
We need a little ray of
sunshine out today, don't
we... This is giving
our viewers... I almost
want to call it a 'blue
light special'...
. . . .
.
FSLR is the solar stock
that is different from all
others...
They use a different
technology...
It doesn't rely on silicon
wafers. And they are
the big bottleneck for the
rest of the solar
business... All the
other solar stocks that
people ask me about all
the time on this show all
use silicon. Silicon
is expensive, and in short
supply... it's being
rationed.
FSLR can do without it...
This company represents a
much cheaper way to
generate solar power...
and that's why the stock
has been absolutely en
fuego (i.e., on fire)...
But we're talking about
them today, because of
their incredible
visibility. What
gives a company like FSLR
the ability to know what
it will earn in 2012?...
Are they just great at
making predictions?...
No man... they've got
contracts. They've
got the juice...
They've locked in the
profits with these
contracts...
The amazing thing about
this company is that it's
already signed contracts
with its customers for
over $6 billion...
$6 billion worth of its
solar modules, through
2012...
Remember, the stock was
down $20 today. This
is why... a good reason to
focus on it. It
could be down again
tomorrow, maybe...
('mon-back sound)...
They've already sold all
this stuff... we know what
their numbers will be.
We actually have a
baseline. There are
very few companies that
can give you this kind of
visibility, especially not
in a solar business, which
I should mention has a 46%
compound annual growth
rate... also known as
CAGR... You'll often
see that in reports...
It's really meant to
mystify you, and make it
so only the pros
understand...
. . . .
.
FSLR isn't only a company
that can see how much
money it will make in
2012... It's also a
company that knows it's
going to have tremendous
growth in the next five
years...
In an environment where
fewer and fewer stocks can
deliver high growth,
because of mortgages...
because of tightening by
Fed... because of
stagflation fears...
FSLR's earnings stream is
even more valuable...
And the great thing about
FSLR is that, even though
these contracts are for
huge amounts of money,
every year, these guys
seem to figure out how to
make their product for
less...
New factories open... they
get higher yields... they
can use more of what they
have... Frankly,
it's a perfectly-virtuous
circle... They're
competitive versus real
energy... a solar stock
that does not need
subsidies in order to be
able to thrive...
. . . .
.
Let's say you're able to
humor me on visibility...
FSLR is still about a $232
stock, up 387% since I
talked about
in March...
Isn't it too expensive?...
Shouldn't we say we missed
it?... Shouldn't we
just be taking a pass?...
Well, since we can see
their future earnings,
let's figure that out...
UBS says FSLR can earn $10
a share in 2010...
Now that's okay... At this
point in the year, when
we're about to switch the
calendar to 2008, it's
okay to look two years
out...
Do you know, in 2010, this
company's trailing only
24x earnings?... with a
56% long-term growth
rate... The multiple
is chump change...
Remember how we look at it
on Mad Money... We look at
the growth rate, and then
we look at the
price-to-earnings (P/E)
multiple... We're
willing to pay twice the
growth rate... We should
be willing to pay over 110
times earnings... Instead,
we're getting it basically
for a little bit more than
you would pay for
Coca-Cola Co. (KO)
or
Pepsi (PEP)...
I mean, FSLR could go much
higher, and we know that's
because their future is
clear...
. . . .
.
The stock should also have
a huge upside catalyst in
2008...
FSLR should announce its
first utility customers in
the United States...
You know that's going to
get a lot of media
attention... You're
going to pick up the
paper... it's going to be
like, the New York
Times... First Solar... a
new candidate to solar...
and you'll be in it for
hundreds of points...
That's going create a
tremendous amount of
attention. Call it
hype if you want to, but
that should boost the
stock....
. . . .
.
Let's get back to the real
reason we like FSLR...
A lot of positives here...
The biggest one for me...
Visibility. No
surprises. We are
not going to be shocked
when we hear that it's
profit forecasts were way,
way too high... but too
low for now... because the
forecasts are based on
real contracts that have
already been signed, and
will deliver huge profits
over the next five
years...
We can see their future
profits now, and the
bottom line is...
. . . .
.
The Bottom Line!:
In this market,
what a terrific compliment
to pay any stock,
including one with as many
other great things going
for it as
First Solar, Inc. (FSLR).
[See Jim's 2nd Opening
Segment stock picks
below... ]
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See all of tonight's stocks'
latest quotes on
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