What else is stewing in our cauldron of evil? Prepare yourself before proceeding to the rest of our world’s scariest stocks.  

"Boo!"

Did I scare ya?

No? Well, let me try again ... "First Solar (NASDAQ:FSLR)!"

Hardee-har-har
What's that? You laugh at my feeble feints at fright? Well, I guess that's understandable. After all, consider the following:

  • First Solar just clocked in at a blistering 75% pace for revenue growth year-to-date.
  • It more than doubled its GAAP profits.
  • And while First Solar missed revenue targets for the most recent quarter, it beat earnings estimates -- and Wall Street predicts a zippy 35% pace for profits growth over the next five years.

So yes, on the surface, everything seems to be going swimmingly at First Solar. It's the most popular kid in class. The hardest worker and greatest earner in the solar space, boasting profit margins that soar miles above Suntech Power (NYSE:STP), SunPower (NASDAQ:SPWRA), or LDK Solar (NYSE:LDK).

Popular ... like Damien in The Omen.

Hard working ... like all-work-and-no-play-makes-Jack Nicholson-a-dull-boy in The Shining.

Appearances can be deceiving
That's what makes First Solar so scary. On the surface, everything looks so good. Yet underneath, there's something creepy about First Solar.

Am I talking about the glut of polysilicon on the market? Yes and no. It's certainly true that First Solar got off to a strong start in the solar market when it offered a thin-film solar solution to the problem of high-priced polysilicon. It's also true that, with polysilicon prices having plunged from $500 a kilogram in 2008 to as low as $55 a kilo today, much of First Solar's advantage has gone up in smoke -- incinerated like a vampire caught sunbathing in Malibu.

Furthermore, a burgeoning price war among the polysilicon makers has already begun pushing prices down. When you combine this with margin-crushing capacity boosts among First Solar rivals such as Yingli Green Energy (NYSE:YGE) and Trina Solar (NYSE:TSL), this could impair First Solar's cost advantage.

Why so glum, chum?
But that's not the worst of it. Consider the contents of a recent Hapoalim Securities research report outlining First Solar's new CEO pay package:

  • millions in salary and bonuses, plus
  • 20,313 "fully vested shares,"
  • 34,084 now-underwater stock options, and
  • 40,625 "restricted stock units."

Lotsa loot? Sure. But even that doesn't worry me too much. Robert Gillette is heading a $10 billion company, after all. A few million in salary and perks seems not inappropriate. What does worry me, though, is what the CEO did with his loot. As soon as he received the "fully vested shares" -- the only equity compensation that he could sell immediately at a profit -- he proceeded to sell them.

To be precise, Mr. Gillette had the company withhold 41% of his immediately saleable shares. Presumably, the intention was to thereby pay the taxes on the remaining 59% of the stock grant. And as First Solar would no doubt contend, this does not technically count as a "sale."

But whatever you choose to call it, I think you'll agree that the CEO's action on Oct. 12 did not constitute a ringing endorsement of First Solar. Had he confidence in the company, Gillette could have paid his taxes in cash, and grabbed all the stock on offer. Prior to taking the helm at First Solar, he routinely pulled down seven figures at Honeywell (NYSE:HON) Aerospace. And the cash portion of his First Solar pay package included a $5 million signing bonus -- more than enough to give the IRS its due.

If he thought the stock was worth more than the cash it was selling for at the time. Which he evidently didn't.

Evidently, and presciently
Of course, the CEO was right. Two weeks after "not selling" $1.3 million worth of his own company's stock, this stock plunged 16% in a single day, after Wednesday's earnings report disappointed the Street. In all, Gillette has already avoided some $275,000 in losses on the withheld 8,327 shares.

So why is First Solar the scariest stock on the Street? Let's review:

  • On Oct. 1, First Solar hired a new CEO.
  • On Oct. 14, that CEO, er, "declined to own" 8,327 shares of First Solar stock.
  • On Oct. 28, First Solar's earnings report sparked a 16% sell-off.

Draw your own conclusions. It ain't rocket science.

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First Solar and Suntech Power Holdings are Motley Fool Rule Breakers selections. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Smith does not own shares of any company named above. (Um, duh.) And no, smart aleck, he isn't short any of 'em either. The Motley Fool's disclosure policy is all for you, Damian!