Little doubt First Solar is the king of the solar stocks. It’s growth and profitability are simply unmatched, and the next five years of production has already been booked. We never really wrote about it because it’s so ridiculously expensive. That might change..

It’s still expensive, but it’s rapidly falling victim to the farcical saga about the extension of the US tax incentives for alternative energy that end at the end of this year. Somehow, new legislation falters each and every time, and we’re in a new episode of the farce, and this time it’s taking all the solars, including FSLR, down hard.

At under $200, with expected profit of $7 per share next year, that’s a p/e of 30. It’s still expensive, especially considering the market, and compared to the solar stock we are following, Trina Solar (which would not be that far behind in earnings, could do $5 per share next year), the valuation difference is still very large.

But, this is how the market has valued it for the last year or so, and we sort of understand, First Solar hasn’t disappointed. It’s last quarter was a real blast having almost a 50% surprise.

We would wait a little longer still, this might be the kind of market that anything is going to get hammered, especially if it’s a still expensive stock in a sector that is perceived as risky. But if you always wanted this company in your portfolio, now could be the time.

As you can see, there is a support level at $180, but if that doesn’t hold, we could go back to $160 and even $140. On the other hand, if the US does manage to extend those tax incentives, there could be quite a rally in the solars, and this is one that is usually leading procedures..