Long-time Cody Word readers know that back in 2010 and 2011, my subscribers and I were short some of the biggest alternative energy stocks on the planet and we made a killing on their subsequent collapse. Here’s an example of our thesis from back in 2011.
I do think First Solar FSLR -6.58% and just about every single other alternative energy company out there is a great short candidate. Call them Solyndra-lites, perhaps! Regardless, these companies’ business models tend to work only if heavily subsidized with government funding that are hard to come by these days and are likely to be cut with a vengeance in coming years.
Fast forward to earlier this year, and I “flipped it” and turned bullish on the alternative energy sector and have been slowly but surely scaling into some of my favorite survivors of the carnage.
I coined the term “Flip It” many years ago, and it essentially is all about being contrarian and objective in your analysis of everything. One of the most important and profitable aspects of “Flipping It” is being willing and able to buy companies in sectors when they are truly hated. And likewise, to short companies in sectors when they are truly loved.
The Clean Tech Revolution Sector is indeed now consolidating at pennies on the dollar for both assets and entire companies. The survivors of this consolidation will likely see some huge gains for investors from these levels in years ahead.
The set-up right now for Clean Tech is probably a lot like it was for Telecom/Dot-com Tech back in about 2002. The Great Tech Bubble had popped in 2000 and most every dot-com and telecom stock was trading at a small fraction of where it had been just two years earlier. Cisco was at $8 a share. Apple was at $10. Amazon is up 10-fold since 2002. Google couldn’t even consider coming public despite generating billions of dollars in revenues.
The companies that survived that crash truly became great investments for those willing to dive in after the crash. Indeed, I launched a tech hedge fun in October 2002 for the explicit reason of buying up tech stocks in the carnage.
First Solar just announced that they’re going to blow away estimates for the year and that they’ve also been buying up some of these bankrupt assets from their former competitors’ carcasses and I think aggressive investors and traders should slowly start building up a long position in the stock. The stock is up again, and I’m angry at myself for not having already stepped into this one with my own capital besides having recommended it to my subscribers already, even just a few weeks ago (See: Cody Kiss & Tell: Unsustainable Banks, Telecom Equipment and When to Take Money Off the Table).
But at any rate, I don’t know how FSLR the stock will trade intraday Wednesday but do think it’s time to add to First Solar and our other alternative energy plays as the rebound phase commences.
To get a full overview of the sector right now, you can buy my book, 100 Stocks for the Clean Tech Revolution, or sign up for TradingWithCody.com to find out exactly what stocks I’m buying and to get the book for free.
Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com, which is not affiliated with MarketWatch. At time of publication, Cody had no positions in the stocks mentioned. Follow Cody on Twitter at twitter.com/codywillard.
Speak Your Mind