With all the volatility in the markets today, there's no shortage of market seers stating that we have reached and now passed the market bottom. Man of the Year Ben Bernanke called a bottom not once, but twice. Heck, even Keanu Reeves laid out what a world-ending market bottom looks like.

Investors should consider buying stocks after a big decline, when pessimism has unduly beaten good companies down to great prices. That's why we here at the Fool -- and 160,000-plus investors like us -- look to the Motley Fool CAPS community to help sniff out the real opportunities from languishing companies driven by speculation.

A real bottom or another leg down?
Of course, there's no foolproof method for timing a market bottom. But CAPS has a great balance of both quantitative and qualitative resources available on 5,400 stocks, and even a nifty stock screening tool to help investors quickly zero in on potential investment opportunities. Once we've rounded up our candidates, we can use all the information in CAPS to test whether each company has already hit bottom or simply primed shareholders for further pain.

I've used the CAPS screener to filter out $100 million-plus companies that have seen their stock price appreciate by at least 15% in the past 13 weeks even while they remain at least 35% below their 52-week high.


CAPS Rating
(out of 5)

Price Change

% Below 52-Week High

LDK Solar




First Solar (Nasdaq: FSLR)




Ambac Financial




Source: Motley Fool CAPS. Results from Jan. 22 through April 19.

The bottom case
Renewable energy investors had hopes of consistent gains to the stratosphere doused in recent years as the whole sector has cooled considerably, but there are several reasons why many investors think First Solar is once again looking nowhere but up. Many cite First Solar's big cost advantage for its thin-film solar technology and think it will help the company maintain a competitive position as rising oil prices stir renewed interest for alternative energy.

The U.S. saw a big jump in installed solar capacity last year, and the Solar Energy Industries Association is predicting continued strength in utility scale projects in the U.S. as states aim to reach goals and mandates for renewable energy. First Solar recently scored a contract to supply solar power to Pacific Gas & Electric (NYSE: PCG) in California, and the future potential for renewable energy in the U.S. is also attracting investment in wind energy from A-Power Energy (Nasdaq: APWR), which plans to build a wind turbine plant in Nevada.

Some analysts believe that the expected decline of subsidies around the world is already baked into First Solar's share price, and the company is staying busy by getting involved with several megaprojects. First Solar and peer Solarfun (Nasdaq: SOLF) are one of the few solar companies that are currently cranking out positive free cash flow, and some CAPS members think the company's solid balance sheet is a big positive in a very cost-competitive space.

Or still on the way down?
Yet even though First Solar may look poised for outperformance, some investors are still concerned about the solar industry's heavy reliance on government subsidies, and are particularly wary of how First Solar will manage with the decreasing solar subsidies in Germany, where the company has a large revenue exposure.

With Chinese solar firms continuing to ratchet up production, the pricing pressure already seen for solar panels could continue, or even accelerate, and First Solar would see margins squeezed further, or sales drop as it competes more on cost.

Chinese firms Suntech Power (NYSE: STP) and Trina Solar (NYSE: TSL) recently secured cheap state supported funding, which some see as an advantage that could help them expand their capacity. Yingli Green Energy (NYSE: YGE) is aiming to nearly double its shipments this year and boost its market share in key markets like Germany and the U.S. This uncertainty, as well as an outside concern that Chinese and U.S. trade tensions could impact solar players, is keeping some investors on the sidelines.                    

What's your call?
Overall, 81% of the 3,744 CAPS members rating First Solar are bullish and see it outperforming the broader market. Many renewable energy investments prove tempting, but I shy away from sectors that are heavily subsidized.

But what ultimately counts is your own opinion; CAPS is just there to help you form it. The best part is that the Motley Fool CAPS database is all free, and you can even add your own insight on any of the 5,400 stocks that our 160,000-plus members have covered.

Always looking ahead, the Motley Fool Rule Breakers service is picking the next generations' big winners today and has already flagged some alternative energy names for subscribers. To see what other rule-breaking stocks David Gardner is recommending now, take a free 30-day trial.

Since getting some new sneakers, Fool contributor Dave Mock is showing a little more spring in his step too. He owns no shares of companies mentioned here. First Solar and Suntech Power Holdings are Rule Breakers selections. The Fool's disclosure policy sometimes gets wound too tight and needs a deep-tissue massage.