Resilient Clean Energy Stock Has Room to Run

The equity is ripe for a short squeeze, too

Nov 25, 2020 at 12:57 PM
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Renewable energy stock First Solar, Inc. (NASDAQ:FSLR) has recently broken out of an eight-year channel, soaring to an Oct. 28, fresh nine-year high of $97.93. The shares are holding above their $9 billion market cap level, a region that coincides with its 50% year-to-date area. With the clean energy sector in the spotlight recently, now seems like a good time to bet on FSLR’s next move higher.

FSLR Nov 25

On Nov. 10, FSLR received a rare “double downgrade,” pointing to pessimism amongst the brokerage bunch, though the equity has since risen on the charts. Of the 11 analysts in coverage, seven carry a “hold” or worse rating, leaving plenty of room for upgrades that could vault the stock higher. Meanwhile, 9.2% of FSLR’s stock is dedicated to short interest and at the stock’s average pace of trading, it would take nearly three days for shorts to cover their bearish bets.

Lastly, premiums look attractive on FSLR at the moment, based on its Schaeffer’s Volatility Index (SVI) of 48%, which ranks in the 17th percentile of its annual range. Plus, First Solar stock’s Schaeffer’s Volatility Scorecard (SVS) ranks at an 87 out of 100, meaning the equity has tended to exceed these expectations. Our recommended call has a leverage ratio of 4.5, and will double in value on a 23.5% rise in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this FSLR commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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