FSLR – First Solar Soars 45% Tuesday! Highlighting One of Our “Coming Out of the Blue” Investment Strategy Names.

I have blogged on 4 separate occasions on First Solar over the last year.  For my regular readers this is old news however for new and future readers I will recap my blogs, with relevant model price charts, to illustrate the effectiveness of stocks transiting both positively and negatively one of our Economic Book Value (EBV) lines we label EBV-3.

The first blog was on April 12, 2012, here.  I highlighted through a blog post FSLR having a negative transit of EBV-3.  We call this negative transit pejoratively “Going into the Blue”.  EBV-3 is our last EBV line in our spectrum of EBV lines and when there is a negative transit by any stock of this EBV line this tells you the market – through the stock price – doesn’t believe the stated asset values on the company’s balance sheet (among other possibilities but this is the main reason).  This real time mark to market indicator gives investors a strong signal to sell their investment in the company.

Here is the model price chart at the time contained in my April 12, 2012 blog.

First Solar with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Since this blog, FSLR subsequently traded down to the $11 level in June of 2012.

In my second and third blog, I highlighted FSLR “Coming out of the Blue”.  This is an investment strategy – specific to Model Price – where a company’s stock price transits positively above EBV-3.  We pejoratively call this “Coming out of the Blue” and we color our EBV-3 line blue for this very reason.  More specifically in my November 28th, 2012 blog I authored the title “First Solar – Coming out of the Blue! Stalking The Big Game (Returns)”.

Was I too obvious with my title!

Here is the model price chart from this November 28, 2012 blog.

First Solar with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Specifically I wrote;

As I have written many times in this blog[roll] about investment situations where the equity price of any security, I fish in the large cap pond, transits above EBV-3.  I call this “Coming out of the Blue”.  “Coming out of the Blue” investment strategy is a very profitable one for those investors, traders who invest when an equity positively transits above EBV-3.  Would I place my whole portfolio into this one situation?  No!  I would diversify in names, industries and even countries.  I can only say from experience the one company you least expect will probably yield you the most profit, often times that’s the nature of investing.  In other words it’s healthy to have a bunch of companies, as many as possible, breaking above EBV-3 and you will never know which will be the most profitable.

I revisit FSLR again on February 19th, 2013 with a blog titled “How Jumbo Gains are Possible Using Model Price – Part 2”.   I noted in the blog at that time even though FSLR had a positive transit of EBV-2 in the first week of January of 2013, the stock subsequently traded down but not through EBV-3.  I commented at the time, “Sometimes it’s important to give these names some room to maneuver but also sell when the position transits down through EBV-3.”

Current model price chart, including the big price gain on Tuesday, April 9, 2013.

First Solar Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

First Solar Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of FSLR subsequent to this post will be maintained on Facebook, here.

Conclusion

If history is any guide – my history over the last 15 years with model price math – I will be updating FSLR additional times in the future hopefully highlighting substantial gains (no specific prediction on FSLR, just going with the percentages of “Coming out of the Blue” companies making the positive transition of our EBV-3 line.)  I would also like to note that patience is required with these individual stock plays.  They need room to “run” if you will, just as long as these companies stay above EBV-3.  If these same companies have a negative transit of EBV-3, you guessed it; this company would be “Going into the Blue” and should be sold.

P.S. Also see my blog Q&A about “Coming out of the Blue”

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