First Solar, Inc. (FSLR) stock is testing nine-year resistance on Thursday, at the cusp of a major breakout that could generate superior returns in coming years. The stock reversed at this barrier in late August and fell 20 points after the company announced an 8.6 million secondary share offering, yielding a bounce just above the 200-day exponential moving average (EMA) in the low $60s. It turned higher at the end of September and has now returned to this critical level.

Key Takeaways

  • First Solar stock has been stuck in a basing pattern since 2014.
  • The company should benefit from aggressive climate change policy.
  • The stock has rallied to resistance for the fourth time and could break out.
  • An uptrend may generate superior returns in coming years.

The solar cell manufacturer and power plant designer should thrive and prosper in this decade, with worldwide political sentiment transitioning out of fossil fuel and into alternative energy sources. The Arizona-based company will also benefit from a 2020 California law mandating solar panels on all new single- and multi-family constructions. A Democratic administration would likely augment these trends, lifting the stock to price levels not seen since 2011.

Wall Street consensus has slowly improved in 2020, with a “Moderate Buy” rating on First Solar shares based upon six “Buy,” four “Hold,” and two “Sell” recommendations. Price targets currently range from a low of $38 to a Street-high $95, while the stock is set to open Thursday’s session about $9 above the median $72 target. This placement may support an initial breakout, but further upgrades will be needed to establish a long-term uptrend.

There are two types of secondary offerings. A non-dilutive secondary offering is a sale of securities in which one or more major stockholders in a company sell all or a large