FSLR has been classified as a solar panel producer, specifically the largest in the United States. But few people realize that the future revenue of FSLR is going to increase largely to the services it offers in conjunction with their solar panel products.
In April First Solar purchased a company called NextLight Renewable Power. This firm was a large player in the engineering and assembly of solar farms. This business is growing rapidly as more state governments, power companies and foreign governments decide that it's now a good time to budget and build some solar farms.
FSLR is going to continue to grow their solar panel manufacturing business but the solar farm revenue will be interesting to watch. This revenue opens up a number of income streams from services which is a big departure from First Solar's corporate history. Now rather than just being a single dimension production company the company will be able to capitalize on services, such as the development of the solar farm and the maintenance of the solar farm.
The services (and associated charges) will add value. The tendency for the mark-ups and gross profit from professional services tend to be higher than the profit from manufacturing and selling a product (in this case the solar panels). The services sold will also incorporate some type of warranty and service agreement. Companies that sell these maintenance agreements usually make a strong profit from this "product" because the extra (emergency) maintenance / repair is not needed.
Services are a great way to make money. In this case there is an extra added benefit. The more solar farm contracts that FSLR gets the more guaranteed sales they'll garner for the manufacturing side of the business. Being able to lock-up this future business for the long-term is going to make FSLR a very solid investment.
FSLR is currently trading at $119 per share. The company is most likely headed higher, but solar can swing wildly. Consider buying First Solar on any substantial weakness. You may want to buy FSLR as a long-term investment without waiting for a dip. There is a decent chance for a market correction in the coming months and now we have even more reason to buy FSLR. The future of this company is going to be very solid and now with their new acquisition the future will be more dynamic than ever.
Consider a long-term (and trading purchase) if FSLR drops below $106. If a substantial market correction takes place be prepared to buy more of this excellent company.
