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Top stocks produce amazing returns over the long run. All too often, investors who prefer to add stocks to their portfolios when they're trading at a discount end up missing out entirely because many top-performing companies rise dramatically for long stretches without giving would-be shareholders a chance to buy in at a bargain price.
That's what makes it all the more important for investors to pay attention when strong-performing stocks do give them the opportunity to buy shares on the cheap. Shares of First Solar (NASDAQ: FSLR), Avis Budget Group (NASDAQ: CAR), and LGI Homes (NASDAQ: LGIH) have all seen declines of 20% or more recently, but they're still up more than 60% over the past year and have plenty of opportunity to rebound from their latest setbacks.
Rain or shine
First Solar is one of the biggest solar energy companies in the world. Solar has been an up-and-down industry in recent years, with triple-digit oil prices in the early 2010s helping to support huge demand for panels before crude's crash sent solar players into a big slump.
More recently, most of the attention on the solar industry has been on whether and to what extent the U.S. would impose tariffs on imports of solar panels. Many of First Solar's competitors were affected to tariff proposals, but because First Solar uses a different technology to produce thin-film solar panels that weren't included under the proposals, it got a huge competitive advantage that has led to expectations of dramatically accelerating growth.
Image source: First Solar.
What's sent First Solar's stock downward in the past month has been the fear that tariffs on competing solar cells and panels might end up getting reversed. A bill in Congress has sought to eliminate the current 30% tariff on solar panels, and that would potentially crush the margin levels that First Solar could see on its Series 6 panels based on current tariff rates. If you think those fears are overblown -- especially given the expansion of trade disputes into a much broader set of areas -- then First Solar's strategy of making solar-panel hay while the sun of tariffs shines could well lift its shares back upward.
Driving forward
Avis Budget Group has been a giant in the rental car space for years, but it's been smart in realizing the potential threat to its leadership position in the industry. The rise of car-sharing services has had an impact on the rental market, and many investors have feared steady erosion of traditional rental car businesses over time. That's part of what makes Avis Budget's moves to acquire car-sharing pioneer Zipcar and to make partnerships with autonomous car innovator Waymo exceptionally forward-looking.