First Solar (FSLR)
Industry: Solar energy
Market Capitalization: $5.8 billion
Total Return Since 3/9/2009: -46%
First Solar (FSLR) has returned to the limelight after a great run since early last year. Shares have doubled, demand has increased and investors have been rewarded.
But despite this short-term pop, the long-term performance of FSLR remains the ugliest in the S&P 500.
The factors that gutted First Solar are numerous. First, the stock was a momentum darling in 2008 — and when growth appeared to dry up, so did investor interest. Shares fell from $300 to $100 in mid-2008.
Secondly, FSLR benefited from high energy prices that made solar technology attractive. When oil fell, so did demand for alternative energy sources that were no longer as cost effective.
Lastly, the glut of oversupply was caused not just by a lack of pricing competition vs. fossil fuels but an end to government subsidies in Europe and big uncertainty sparked by the financial crisis that eliminated capital intensive projects like solar installations for businesses and consumers alike.
It was a perfect storm, with most of the thunder and lightning coming in 2011, when FSLR dropped 75%. And while First Solar has fought back recently, it still has a long way to go to reach levels seen before the financial crisis.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.