In the summer of 2007, I took a shot at First Solar (NASDAQ:FSLR), or, more specifically, the company's valuation. At the time, the company sported trailing annual revenue of $188 million and net income of $15 million. I judged the its price-to-earnings multiple of 500 to be at a nosebleed level, and I warned investors that they were likely to get burned.

Just three quarters later, First Solar's net income had risen tenfold. In April 2008, the shares hit $300. Both the company's financial results and the stock price made me look like an absolute buffoon.

When I penned this skeptical take, I figured that First Solar would need to post annual earnings growth of 138.5% for the next five years to be fairly valued. The company is off to a great start in that regard:

Year 0 (Trailing Results as of Q1 2007)

$15 million

Year 1

$200 million

Year 2

$466 million

Data provided by Capital IQ, a division of Standard & Poor's.

It took the company only two years to achieve nearly four years' worth of growth, compounded at a steady 138.5%. This head start gives First Solar at least a fighting chance to hit that $1.16 billion five-year target of mine. It now just needs to grow its bottom line at a rate of around 35.5% compounded over the final three-year stretch, ending with the first quarter of 2012.

Piece of cake, you say? The median long-term growth estimate among 15 Wall Street analysts sits at 30%. After a largely unbroken record of outperformance, it's amazing that First Solar still needs to beat current expectations to prove that it wasn't overvalued back when I made my seemingly boneheaded call.

I started feeling a little less stupid when First Solar dropped below $300, and then $250, and then $200. Today, the shares trade just a few bucks north of where they were back when I was waxing mythological about Icarus back in July 2007.

Since that time, I have assumed coverage of a wide range of solar players, from SunPower (NASDAQ:SPWRA) (NASDAQ:SPWRB) and Suntech Power (NYSE:STP) to Yingli Green Energy (NYSE:YGE) and ReneSola (NYSE:SOL). Aside from tuning into the quarterly earnings calls, I also monitor industry developments on a weekly basis. Along the way, I have gained much more appreciation for the caliber of First Solar's management team, which is now transitioning to its second CEO. This company has executed at an extremely high level and is well prepared to face future challenges.

My lack of insight back in 2007 actually served me pretty well. I was wildly short of the mark with regard to First Solar's near-term growth trajectory, yet I still haven't missed out on any long-term share-price appreciation by avoiding this market leader to date.

This is exactly why Fools look for a large margin of safety when investing. Paying something approximating fair value isn't good enough. Like me, you are going to get things totally, woefully wrong at times. The margin of safety helps prevent permanent capital loss arising from your inability to predict the future.