Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

2 Stocks That Fell Hard on Thursday

By Eric Volkman - Sep 26, 2019 at 8:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It wasn't a good day to be a traditional stock brokerage -- or a solar energy company.

Welcome to the roller coaster.

One day the markets are up, another they're down... a person can get dizzy these days just tracking the motion of the various stock indexes. They'd also get woozy following the downward trajectory of the following two prominent stocks, each of which took a tumble on Thursday. Perhaps, though, this makes them buys on their reduced prices.

Two women on a roller coaster.

Image source: Getty Images.

First Solar

It was an overcast trading day for solar energy stocks in general, with most of the notable ones losing more than the S&P 500 index. These traded down anywhere from 3% to almost 10%. Landing more or less in the middle was a bellwether stock in this business, First Solar ( FSLR -0.61% ).

Nothing specific slammed into the industry on Thursday, so it's hard to tease out any immediate reasons for these sell-offs. Perhaps, on a bearish day, it's easier to get spooked about stocks that have had significant runs -- as have First Solar and quite a few of its peers. Even with today's downtick, First Solar stock is still up 47% year to date, while peers have risen even higher. That compares very well to the S&P's increase of 19%.

Another dynamic at work here is the volatility of the solar energy sector. We should bear in mind that, as a viable industry, it is still quite young. And the current imported solar cell tariff regime, while not as damaging as initially feared, is holding back an otherwise high-potential industry.

Meanwhile, there are plenty of players in this game, costs are rising in the business, profitability is erratic, and valuations are high. Even though First Solar's stock price was whacked hard today, the blow wasn't hard enough to make me a buyer, although I like the company specifically and the solar sector generally.

TD Ameritrade

A more definite factor was at work today in the brokerage sector, with TD Ameritrade ( AMTD ) getting hit particularly hard. The stock declined by almost 7% on the day.

The factor was Interactive Brokers, a relative upstart that announced today it was rolling out a new service (IBKR Lite) that would allow clients to trade stocks and ETFs commission-free with no limits. The service will also not penalize customers with inactivity fees, and it has no account minimum.

Does this ring a distant bell, followers of the brokerage sector? It should. In 2017, TD Ameritrade peers Fidelity and Charles Schwab reduced their commissions on trades to $4.95. (TD Ameritrade also reduced, but not that drastically -- it set a rate of $6.95.) Not to be outdone, JPMorgan Chase put a big fat zero on its commission rate for the first 100 equity trades made by its clients, and financial services provider Robinhood also went the $0 route.

At the time, TD Ameritrade weathered the storm pretty well, managing to grow key operational and financial metrics despite the price-smashing cyclone on the market.

What helps is its broad slate of products and services. I'm both a shareholder and a client, and I'd say these are fairly comprehensive for my (admittedly modest) needs. So I don't mind paying less than an Abe Lincoln for each of my trades. The continued growth in customer numbers, while not spectacular, indicates TD Ameritrade is doing a reasonably good job of customer retention and acquisition.

Zooming out a bit, despite Thursday's stock market slump, we're still riding a very long bull market. Trading is robust; people still want to own stocks, ETFs, and everything in between. I think TD Ameritrade will again pull through and I still rate the stock as a buy, although I'm keeping a wary eye on commission rates -- I think the price war has some battles to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

TD Ameritrade Holding Corporation Stock Quote
TD Ameritrade Holding Corporation
AMTD
First Solar, Inc. Stock Quote
First Solar, Inc.
FSLR
$100.58 (-0.61%) $0.62

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
652%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.