In early 2011, this stock traded at a high near $175. Within a year, shares plummeted to less than a third of that value, near $50. They continued in a freefall into early summer 2012, hitting a low near $11.40 in early June. Since that time, they have more than doubled.#-ad_banner-#

Now, First Solar (Nasdaq: FSLR) — the world’s largest producer of thin-film solar panels — looks to be headed even higher. If a significant nearby resistance level can be broken, the technicals point to sharp gains ahead.

Helping buoy the stock are rumors the company may be awarded a major contract to supply solar panels to electric utility, NextEra Energy (NYSE: NEE). The panels would be used for a solar farm in Southern California that would become the largest solar operation on the planet.

First Solar is a front-runner because it’s one of the only manufacturers with enough capacity to make the project happen. The company also has a history of supplying panels for similar projects.

First Solar is currently building a large solar farm in Arizona, for electric utility company NRG Energy (NYSE: NRG). The solar farm, known as Agua Caliente, is 85% completed and will also be one of the world’s largest solar farms.

In addition to these U.S. projects, First Solar has its sights set on China. This past August, that nation announced plans to increase solar power to 40% of total generating capacity by 2015. This target marked the third increase in a year. In response, First Solar recently appointed Bruce Yung as managing director of business development for China. Yung has 25 years experience in the energy industry and recently served as managing director of a private firm, China Renewable Energy Investment.

Traders seem optimistic about First Solar’s potential. As the two-year chart below shows, the stock was in a major downtrend for all of 2011 and much of early 2012. In just a year, shares tanked 92% from the June 2011 high of $142.22 to the June 2012 low of $11.43.

However, since hiatting this low, the stock has been climbing higher. In late June, shares hit a high of $16.42 before retreating. The stock found support around $13.86 and held this support level into mid-July.

At that time, shares again began to climb. By early August, the stock had broken the major downtrend line — a significant technical feat. Continuing the bullish momentum, shares moved to a high of $24.93 by early September. In doing so, the stock has almost completed a basing pattern.

First Solar now has met resistance at the $23 to $24 level. For the past five of six week, shares have unsuccessfully attempted to break this resistance. However, the more times resistance is tested, the more likely it is ultimately to be broken.

If the stock can break out above $24, it could easily climb close to $30 before encountering another small shelf of resistance. If it was able to penetrate $30, shares could test $50 before encountering another significant resistance level. From current levels, this means the stock could again double.

This strong technical outlook is supported by a solid fundamental outlook. Although analysts project third-quarter revenue and earnings to drop from year-ago levels, fourth-quarter results are expected to be superb. Based on an increase in both the number and size of projects, analysts’ project fourth-quarter revenues will surge 98% to $1.3 billion, from $660.4 million in the comparable year-ago period.

The company also expects full-year 2012 results to be strong and recently increased guidance. Management now expects revenue to be in the $3.6 billion to $3.9 billion range, up from previous estimates of $3.5 billion to $3.8 billion.

The earnings outlook is similarly positive. Fourth-quarter earnings are expected to skyrocket 48% to $1.86, compared to $1.26 per share in the same period a year-ago.

Management expects full-year 2012 earnings to be in the range of $4.20 to $4.70, up from previous forecasts of $4 to $4.50. That means at current levels, the shares are trading at just over 5 times 2012 estimates.

The company is also attractively valued based on its projected five-year PEG ratio (price-to-earnings divided by growth rate) of 0.19. A PEG of 1 or under typically shows good value.

Risks to consider: Although First Solar hopes to expand into China, it might meet significant competition from rival China-based solar manufacturers. Although this outcome could impact the company’s growth, First Solar has a stronghold in the North American market. It appears likely the company will continue to supply solar panels in the United States for the world’s largest solar farm projects.

Action to Take –> Place a buy-stop order at $23.83, a few cents above current resistance, good until Friday, Oct. 26. Set stop-loss at $13.84, slightly below important major support. Set target at $51.89 for a potential 118% gain by mid-2013. Risk/reward ratio is 3:1.

This article originally appeared on TradingAuthority.com:

This Decimated Solar Giant Could Double From Current Levels