The 5 Scariest Stocks to Have in Your Portfolio

• «
• »

Scary Stock #4: First Solar (FSLR)

First Solar (FSLR) is part of the Chinese solar industry -- an industry that's one big bubble!

I would like to provide a fundamental analysis of First Solar, but since it's a Chinese company, that would require paranormal skills that are found only in buy-side analysts who do investment banking or hope to do investment banking business in China and the Chinese solar industry. These companies boast iffy and unreliable accounting data. Orders from suppliers to assemblers are single, double and triple booked -- not in their earnings statements, but in the "insights" provided by analysts.

Furthermore, solar sales are being driven by Chinese government largesse; stock prices are being driven by loans from state-owned banks; and how long do you think the United States and Europe are going to give these companies unfettered access to their markets if China does not devalue? Plus, the put premiums reflect the contention that the Chinese solar industry is in a big bubble. Stay away!

Next: Scary Stock #5