Do you remember this company, First Solar, Inc. (NASDAQ/FSLR)? This burgeoning Arizona power module manufacturer for the solar energy industry was just trading around $50.00 per share one year ago. Now the stock is over $300.00, with earnings expected to double this year and the next.
This company was written about in this column a number of times last year. The stock serves to illustrate that you can make money in any market environment, as long as you own the right stocks.
First Solar pulled back significantly in value during the first three months this year, commensurate with the correction in the broader market. Like many other highly speculative, high-growth investment opportunities, this stock recovered. If you didn’t have the stomach to hold on throughout the volatility, you would have missed out on the stock’s recent capital appreciation.
A stock like First Solar is one that can be traded, and/or used as a long-term investment. Trading almost five million shares a day, this stock is highly liquid. The company is now valued at somewhere around $24.0 billion dollars.
It most definitely takes a lot of courage on the part of a trader or investor to be speculating in these kinds of high-risk stocks. The solar energy industry, which for years languished in relative obscurity, is now front and center in the alternative energy investment theme. This brings us to another important point of being successful in equity investing — timing.
So, a stock like First Solar illustrates to us that, in order to be a successful investor, you have to own the right stock, you have to have the courage to handle the volatility, and you have to do all this precisely at the right time or youll miss the major capital appreciation. Nobody said the equity speculation business would be easy.