So it goes: oil and gas prices have fallen off, which means thatinterest in alternative energy has declined in kind. Solar ETFs are down significantly for the year, but will it always be so?
Last week, SunPower (SPWRA)gained 22% on decent first-quarter profits, which helped propel Claymore/MAC Global Solar (TAN) 8% higher, reports Don Dion of the Street. SPWRA was able to do this even though it only accounts for 3.6% of TAN’s net assets.
Today, SunTechPower (STP),which is 5.1% of TAN’s holdings, will announce earnings and may also becapable of affecting TAN’s short-term fortunes more than its share.
Over the past four quarters, STP has been able to beat analysts’ earningsestimates by an average of 100%. If history repeats itself, both STP and TAN may be in for a good run, assuming the broader market doesn’tsell-off dramatically.
One point of caution on solar funds:eurozone companies compose 30% of TAN. Considering the economic issuesin that region, it seems unlikely that the cost structure of solarenergy will improve any time soon. Market Vectors Solar EnergyETF (KWT) hasslightly exposure to the eurozone – Germany is 20%, while Norway, United Kingdom and Spain all account for smaller portions – but it’s stillthere.
While Europe sorts out its many issues,it may be worth sitting back and watching these funds until they makethe all-important 200-day moving average crossover.
- Market Vectors Solar Energy ETF (KWT)
Sumin Kimcontributed to this article.
Disclosure:None