The solar panel manufacturer was punished in recent years by the industrywide collapse in prices. But now rising demand is boosting the company's sales - and its stock price.

Indeed, the past few years have been a dark period for the solar industry. Chinese companies, fueled by government subsidies, created a glut of supply and helped drive down prices some 75%. That may have been good news for customers, but it was a disaster for the companies that manufacture solar panels. Red ink flowed, and major players -- including China's Suntech and Solyndra in the U.S. -- went bankrupt.

So why is First Solar optimistic about it's prospects now? For one thing, prices have finally stabilized. The huge surplus in manufacturing capacity is starting to abate. demand is soaring -- for a variety of reasons. China plans to install an ambitious 10 gigawatts of solar capacity this year. In the U.S. the solar industry grew 76% in 2012 as PV manufacturers installed a total of 3.3 gigawatts of power, or the equivalent of a new nuclear power plant. Generous state subsidies in California and elsewhere have driven sales, as well as the fact that 29 states now have requirements that a certain percentage of power come from renewables.

For all the good news, a lot can still go wrong for First Solar. Until someone comes up with a cheap way to store solar power so that it's available 24/7, it will never be considered a mainstream part of any nation's power system. And then there's always the possibility that the company's thin-film technology will become obsolete. U.S. government scientists have demonstrated potentially game-changing silicon cells that achieved a 40% efficiency in the lab. They're extremely expensive, but over time costs could fall.

A more immediate threat is that the new demand for solar will dry up. Some big markets such as California have already contracted for about as much solar as they need to meet their renewable-energy targets, so future growth is likely to slow there. And lower natural-gas prices in the U.S. have made it harder for solar to compete on price. Europe -- still the biggest solar market in the world -- is now in the economic doldrums, and nations there are pulling back on subsidies.

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